Bigger is better
For broadband speeds it seems very clear that bigger numbers are better. Yesterday’s announcement by Virgin Media offering 1.5 million of its customers an upgrade to 50mbs set great stead by the half century of speed it offers, double that of its closest rival and greater than the 20mbs it previously offered to consumers as ‘the mother of all broadband’. Just in case the number doesn’t represent enough altitude Virgin’s CEO Neil Berkett went on the record saying that Virgin could roll out 100Mbps tomorrow though 50Mbps is a more manageable step up for the time being.
It would appear pretty reasonable at this stage to ask what this speed increase allows you to do any differently. Virgin cites movies downloading in just three and a half minutes and music even quicker, as just some of the benefits of the new and improved service. Households with multiple and simultaneous internet users which generally strain slower connections would also benefit from the upgrade and looking out at the changing broadcast market HD over the internet could be an innovation supported by this fibre evolution.
What else? The Broadband Stakeholder group who advise the government on next generation access issues have a neat triptych of benefits they have identified around speed and quality of service. They say it will allow efficiencies through saving time, expansion through doing more of existing things and transformation, by doing entirely new things.
And so, inevitably to price. This is the crucial issue here as unless Virgin can offer this premium service at a premium price then the economics of NGA look very shaky indeed and BT, amongst others will be watching very closely to see what the uptake of service is like. Some analysts have been sceptical with Ian Watt, at Enders, describing the first-year price of £602 or at least £46 a month - including broadband, line rental, installation and free wireless router - as "very high in the context of a consumer recession and the price of some lower-speed offers.’ However Virgin can point to a significant increase in its customer base for 20Mbps - the previous premium product, priced at £35 – which has now grown to 55 percent as evidence of appetite for their premium offering. 48% of UK households have access to the cable network so Virgin also does have the potential to scale up this offering substantially and they expect to have upgraded their entire network by the summer of 2009.
The interesting subtext in all of this is that Virgin’s move could be the catalyst which drives other players to roll our next generation networks as consumers are impressed with the nice round number 50. The telecoms market will be keen to identify which number the consumer cares about more though, the 50mbs of speed or the roughly £50 of sterling it costs.
By Sam Ingleby, Programme Manager



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