DSL should be £20 a month, says report

High prices are the 'death knell for DSL'

By Tim Richardson, 3rd October 2001

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DSL services must be subsidised if the price is to fall sufficiently to make it a mass-market broadband product.

A report handed to the Government last week claims that the pricing of ADSL is a "huge issue" and warns that the proposed price point of around £50 a month is regarded as a "death knell for ADSL".

The view of the task group on Content and Demand Generation, which reported to the Broadband Stakeholders Group, is that the cost of ADSL for home users should be between £20 and £30 a month, which would put it on a par with countries such as Korea and Singapore.

Said the report: "The consensus view is that less than £30 and nearer £20/month is what it will take to get the ball rolling with the individual user.

"However, without some kind of subsidy current economics preclude the offer of these rates," it said.

Commenting on the launch of the report last week e-minister, Douglas Alexander, said that BT should follow the cable companies' lead and set "fair prices" for broadband, although he stopped short of saying what price he thought was "fair".

Currently, the cost of DSL services starts at around £40 a month although cable companies offer far cheaper broadband services - within the £20 to £30 range - as part of bundled TV and telephone packages.

However, it is not just the cost of broadband access that is holding back its development.

The report claims that the lack of awareness about the benefits of broadband is also a barrier to take-up although both the cablecos (NTL and Telewest) and BT (both BT Wholesale and BT Openworld) have recently engaged in marketing campaigns.

Elsewhere, the report proposes a series of initiatives to stimulate demand including ways to generate the creation of broadband-specific content - something seen as a driver for broadband take-up.

One proposal is to give schools "electronic learning" credits which they can use to buy educational broadband content. With primary schools getting £2,000 a year and secondary schools receiving £10,000 a year, it's hoped that this £100 million pot of cash will entice companies to produce broadband content.

Another proposal is to reduce VAT on ecommerce transactions for smaller companies in a bid to encourage them to adopt business-to-business (B2B) and business-to-consumer (B2C) content.

Of course, the report doesn't just maintain that subsidy is the answer to broadband Britain's flagging fortunes.

It realises that the advertising, ecommerce, the games industry will all play their part in generating revenue and funding. So too will pornography, which the report claims is "probably the biggest revenue component of current Internet content" and "likely to be a big source of funding" in the future. ®

E-minister calls for lower broadband prices