The first 50mb broadband service was launched in the UK yesterday, but at a cost of up three times more than the standard service and with only limited availability. Virgin Media introduced its super-fast broadband service which it claimed was nine times faster than the industry average, and talked of hitting 200Mb in the next few years.
BT is preparing to plough a £1.5bn investment into its network to boost broadband speeds around the country, and providers including BSkyB and TalkTalk also plan upgrades. Most hope to double the broadband speed in the next few years.
On the old dial-up internet connections, downloading a DVD-quality movie could take more than five hours. With the latest speeds, movies can now be on home computers in as little as three and a half minutes – almost the same time it takes to make a cup of tea.
At a press conference in London, Virgin chief executive Neil Berkett called the launch a "step change" in the industry and a "historic moment, for both Virgin Media and the UK." He added, "Welcome to broadband's golden age". Every journalist was given a goodie bag including an iPod Nano to mark the occasion.
The high-speed internet access reflects the changing needs of consumers, Virgin says, because customers want to download movies and music, upload content, stream TV and increasingly interact with each other on sites such as Facebook and Bebo.
Charlie Ponsonby, chief executive of Simplifydigital, an independent broadband price comparison site, said that 2009 will be "a very interesting year for the UK broadband market; the launch of ultra-fast broadband will really start to change people's perceptions about what is an acceptable broadband speed." Providers are expected to aggressively market the new speeds, with anything less than 20Mb seen as second-rate.
Virgin's 50Mb service is available to about a million homes, but is hoping to roll it out to the entire customer network of 12 million next year. The group commissioned YouGov this year to research broadband trends. It found that just more than half of Britons watched TV programmes or clips online in the past year, and added that a record 88 per cent went online every day. It believes the future is in providing more bandwidth for those demanding ever-more data heavy content.
Jeremy Beale, head of e-business at business lobby group CBI, said the huge demand was not there yet. "Companies are increasing the speed not because they fear being outgunned by their rivals. The demand isn't there yet; it's about preparing for the future."
But analysts wonder whether families struggling in the economic downturn, will fork out as much as £51 a month for the standalone service. Rivals pointed out that although customers have access to 10Mb or 20Mb, 71 per cent of Virgin's broadband users currently use the 2Mb service.