Internet speed is not of the essence for business

A massive 80 per cent of the UK's small to medium-sized enterprises (SMEs) do not see the business benefits of high-speed internet and data communication services, according to a new survey by Mori and the business internet service provider Mistral Internet.

A massive 80 per cent of the UK's small to medium-sized enterprises (SMEs) do not see the business benefits of high-speed internet and data communication services, according to a new survey by Mori and the business internet service provider Mistral Internet.

The survey, which covered a representative sample of 200 senior managers at SMEs, also found that 70 per cent of companies disagreed that instant access to the internet was critical for their business.

Around 77 per cent of UK SMEs said that the internet is already fast enough for them to conduct business, with 47 per cent saying that they did not expect broadband to be crucial to their business strategy in the next two years.

The figures illustrate the uphill battle faced by the likes of BT and communications firms such as NTL, Telewest and Energis in selling next- generation services to UK businesses.

The news is also likely to prove an embarrassment to the Government, which has made much of its commitment to the wider roll-out of broadband services for business.

Stephen Rowles, deputy group managing director at NTL Business, said the key Mori findings were in line with its own research.

"This is a chicken and egg scenario and until, as a country, we can provide broadband access to small businesses, they won't understand the benefits. It's only just beginning to happen in the UK," said Mr Rowles.

The UK is already lagging behind continental Europe and the US in providing broadband access ­ a situation which industry has blamed on a lack of investment and the relatively uncompetitive nature of the UK market.

Mistral, which commissioned the survey, called on the Government to invest more in promoting broadband usage. The Government has been criticised after it allocated only £30m in subsidies to regional development agencies to develop broadband.

"The take-up of broadband in the UK has been much slower than in major markets such as the US and Germany," said Bhawani Shankar, principal analyst at Gartner, the research group.

"In many ways broadband was mis-sold to small business ­ initially it was over- hyped and didn't deliver in terms of quality," he added.

Weak demand for broadband is likely to have implications for smaller companies such as those in the application service provider market, which give remote access to software applications and rely on broadband as a delivery mechanism.

"It's quite shocking to be honest," said Karl Robinson, operations director at Mistral. "The cable companies are investing massively, I don't think this spells disaster but I think it will take longer than previously anticipated to see the real returns."

He added: "There's a lot of work to be done. It's up to companies like ourselves and the bigger players such as BT to educate the end user about the importance of having broadband."