Broadband Snapshot - May 2008

A snapshot of how the UK's broadband suppliers are differentiating themselves on price and service offerings in May 2008. Use the tables and charts below to see how your current or potential new service provider compares against the overall broadband market for broadband speed, monthly usage allowances, cost of ownership in the first year and minimum contract lengths.

Suppliers

The broadband summary below was established using a sample of 64 products from the principal 19 suppliers advertising broadband services in the UK.

Broadband Speeds

Surprisingly, there are still some pre-MAX broadband speeds on offer, although it's hard to imagine that they continue to represent a significant number of sales, particularly those under 1 Mb.

89% of products come with download speeds up to 8 Mb. This reflects the continuing dominance of BT Wholesale as the main wholesaler of broadband. However, with local-loop unbundling continuing apace from competitors like TalkTalk (1,632 exchanges), AOL (1,049 exchanges) and Sky (1,179 exchanges), along with BT's rollout of Wholesale Broadband connect (currently 88 exchanges), we can expect the number of broadband products with potential download speeds greater than 8 Mb to increase over the coming months.

Advertised speed	Number of products	Percent
Up to 512 kb	2	3%
Up to 1 Mb	2	3%
Up to 2 Mb	6	9%
Up to 4 Mb	1	2%
Up to 8 Mb	46	72%
Up to 16 Mb	3	5%
Up to 20 Mb	2	3%
Up to 24 Mb	2	3%
Table 1. Number of products promoting the indicated maximum speed as advertised in May 2008.

Figure 1. Chart showing the distribution of advertised broadband speeds.

Broadband Usage Allowances

Almost half of broadband products now come with unlimited monthly download limits, which is good news for those who do a lot of downloading of audio and video content or who utilise peer-to-peer networks. However, that bandwidth does need to be paid for by the ISP. In the light of innovative bandwidth- hungry applications like the popular BBC iPlayer, consumers must check carefully the Terms and Conditions and Fair Usage Policy and watch out for any traffic-shaping that the supplier may apply.

Monthly Allowance	Number of products	Percent
1 GB	1	2%
2 GB	4	6%
3 GB	1	2%
5 GB	6	9%
6 GB	2	3%
8 GB	2	3%
10 GB	5	8%
15 GB	1	2%
20 GB	2	3%
30 GB	1	2%
40 GB	8	13%
50 GB	2	3%
Unlimited	29	45%
Table 2. Number of products promoting the indicated monthly usage allowance as advertised in May 2008.

Figure 2. Chart showing the distribution of monthly usage allowances.

Year One cost of broadband

The year one cost of ownership includes:

• the standard monthly service charge
• any introductory pricing for an initial period
• any setup or connection fee

Complicating the analysis is the wide range of additional features that are bundled in with the broadband service. As far as is possible we have only included the pricing for basic broadband access.

The mean year one cost for May 2008 is £227.16. We will be tracking this figure over the coming months to see if the true cost of ownership continues to decline.

Figure 3. Chart showing the number of products versus Year One cost of ownership of broadband.

Initial contract duration

From the service provider's perspective, after acquiring a new customer, their priority has to be to hold on to them. Firstly, to recover their costs sunk with new customer offers and their set up fees, and then to generate a profit. One attractive way to do this is to lock the customer in contractually for as long as is viable. Customers, wary of possible poor broadband or customer service, will seek out the shortest possible contract length, while those less savvy may be locked in for a year or more before they realise it.

From the May 2008 analysis, the weighted average broadband contract duration is 11.9 months. It will be interesting to see how this figure changes as service providers look to recover the costs of increasingly expensive customer acquisition.

Figure 4. Chart showing the number of broadband products with initial contract durations of 1, 3, 12, 18 or 24 months.

© 2008 Qaltic Software. All rights reserved.