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2004: the year of British broadband ...

...and tough-talking regulators

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The smart choice: opportunity from uncertainty

2004 in review It's been a good year for broadband in the UK. Take-up has almost doubled; charges have continued to fall, breaking the all important £20 a month price point; and more of us can hook up to it - if that's what we want.

As a snapshot of the last 12 months - for end users at least - that's not bad going. At the start of the year there were some 3.2m broadband connections in the UK, split fairly evenly between DSL and cable. Since then, demand has gone through the roof. The latest figures from BT show that there are more than four million DSL connections in the UK, with numbers growing by around 60,000 a week. Tag on the estimated 1.7m cable broadband customers and broadband growth is steaming ahead.

Tre are two main reasons for the growth. First, continuing decline in prices. Of the big three ISPs, Wanadoo UK led the way when it cut the price of its 512k service to £17.99 a month in April. Four months later it doubled the speed of its service. while keeping the price of the service on hold.

As a result of the fierce price competition that has gripped the market, BT was forced in October to cut the price of its entry-level broadband service by £2 a month. Despite this, BT Retail's market share of the UK's broadband market continues to fall as rival operators introduce more flexible, innovative and cheaper products.

This means little to those who can't get broadband. Thankfully for them, in April BT abandoned it broadband pre-registration scheme acknowledging that there is sufficient interest in broadband, after all. In September the telco also lifted line limits and extended the reach of its broadband service resulting in an estimated million more homes and businesses being able to get connected DSL broadband. BT's accelerated roll-out should make DSL broadband available to 99.6 per cent of UK homes and businesses by summer 2005, bringing the UK "significantly closer to universal availability".

So, broadband is booming and competition is delivering cheaper prices and more innovative services, but BT's dominance of the wholesale sector remains under the microscope. Regulator Ofcom kicked off 2004 with an industry-wide review that could lead to some major changes in the industry. As part of that process, local loop unbundling (LLU) was given a shot in the arm. Although it is still dogged by problems, the cost of LLU has fallen by around 70 per cent over the year and a number of operators, including C&W, NTL and Wanadoo UK have said they will invest in broadband.

Last week Easynet unveiled a new wholesale broadband product that will provide ISPs with an alternative source for DSL broadband other than BT with business ISP Onyx Internet becoming its first wholesale customer. While LLU is sure to make its mark in 2005, it is the ongoing battle between Ofcom and BT that is likely to see the most action. In November, Ofcom rejected calls to break up BT but demanded instead for the telco to make "substantive behavioural and organisational changes" and to provide equal access to its wholesale product range.

BT has until February to come up with a range of proposals to satisfy the regulator's demands. If it doesn't, then Ofcom has threatened to take the mighty telco to the cleaners. It should be a very interesting new year. ®

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Tough-talking Ofcom boss slaps BT
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