Ben Verwaayen, BT's new boss, has given hope to thousands of small businesses by promising to halve the wholesale cost of broadband internet access, an area in which the UK lags pathetically behind its international rivals. By doing so, he has also encouraged Tony Blair's government that its vision of a "Broadband Britain" may finally come true.
Anyone with a small business who has enquired about broadband services or who already subscribes to one will know that the present situation is a scandal. It's the online version of Railtrack or the Tube. To the Government's embarrassment, recent figures show that the UK has connected only about 136,000 users to a high-speed ADSL service, which runs across traditional copper telephone lines; this compares with about 2.1 million users in Germany.
What is broadband? If you picture the internet as a pipe down which data travels, the broader the pipe, the more information you can stuff down it – quicker. Thus while a traditional telephone line can connect you to the internet via the now commonplace 56.6 kb/s modem, the new broadband services can do so at 10 times the speed.
This has several important advantages for small businesses. Broadband is "always on" – you don't have any of that tedious dialling up process each time you want to see your latest emails. As soon as you switch on your computer, you're connected. This can save a lot of time and hassle if you communicate with clients and suppliers by email.
Since present broadband services are about 10 times as fast as the 56.6 kb/s modems most people use to access the internet, you can receive big emails with graphics attachments a lot quicker. You can also send emails about twice as fast as orthodox modems allow.
Broadband allows dramatically faster downloads, and many suppliers promise that subscribing to broadband changes the way you use the internet. This is because, for the first time, you will be able to download video, radio and TV feeds in reasonable time. For instance, a 10 megabyte (Mb) file being downloaded by a 56.6 kb/s dial up modem would take 24 minutes, whereas a 10 Mb file being downloaded over blueyonder workwise (a broadband service offered by Telewest) would take three minutes.
Whether you would want to download video or sophisticated graphics for your business depends on what types of business you run, but the speed factor for internet access applies to all businesses.
Do small businesses need broadband? You can probably get away without it, but it would be very useful. However, present rental rates of a minimum £30-£40 a month (not counting set up costs in the hundreds) make broadband just not worth it for the majority of small businesses. This is why the recent announcement by Ben Verwaayen is so important. If costs can be brought down dramatically – and that's a big "if" – then we could see a rapid migration to broadband by small businesses.
As usual, the devil will probably be in the detail when BT unveils its precise plans. Also, it is important to note that Verwaayen is promising to halve the cost of wholesale access, that is, access that BT provides to Internet Service Providers (ISPs). These ISPs then repackage the service and sell it on to you and me. ISPs would include companies such as Freeserve, AOL and Demon. While BT is preparing to slash its wholesale costs, it is up to the ISPs to pass on these savings.
At the moment, BT charges a connection fee of around £150 and £30 rental a month to wholesalers for its most basic broadband service. This product uses ADSL technology, which enables you to get broadband access even through an ordinary copper phone wire.
The other two broadband services commonly available in the UK come from the two big cable companies NTL and Telewest. They usually both use optical cable, similar to the wire that connects your TV to its aerial, although they also offer ADSL services. These optical cables can carry vast amounts of information very quickly, but their take-up has been dogged by both high cost and poor service.
Much of the blame for this must go back to the way the cable companies were set up, primarily by engineers. The first thing they had to do was lay a cable network throughout the UK, so the business was dominated by engineers rather than customer-service specialists. Sadly, both marketing and customer service levels have lagged badly. Whether Verwaayen's promise to slash costs will spur these two cable groups to improve remains to be seen.
Confusingly, BT also offers a retail broadband connection through something called BT Openworld. This is entirely separate to its wholesale operations. BT Openworld competes with other ISPs and charges customers £39.99 a month for access to broadband.
Ironically, many ISPs are worried that if BT does cut its wholesale costs, then it will be able to undercut its competitors and establish a near-monopoly in broadband. In Germany, of the two million people who have broadband, 99 per cent subscribe to the former state telecoms monopoly Deutsche Telekom. Cynics suggest Verwaayen is planning to grab the same kind of slice in the UK, to which I can only say, I wish he would get on with it. A cheap monopoly may be preferable to the present ruinously expensive "competition".
Turning to the broadband packages available at the moment, Telewest offers something called Blueyonder, which uses optic cable and an always-on modem able to download at 512 kb/s (remember most modems which are 56.6 kbps). This means you can use the phone and internet at the same time since it uses a separate broadband cable, not your phone. The Blueyonder service for small businesses costs £295 to install in addition to a monthly fee of £109. With this you also get ISP-type services, such as five email addresses, 20 megabytes of webspace in which to host your own website, and domain name registration services.
Both Telewest and NTL offer packages which combine broadband internet, telephone and TV services. While many of these are attractive, the cost and low level of customer care may put you off. Both also offer specially tailored small business packages, but these really are expensive, costing over £100 a month.
If the Government's vision of a Broadband Britain is to come true, Verwaayen's reforms are going to have to be deep and sustained.
For more information on BT Openworld, visit
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