Money for Nothing?

Access to the Internet in the UK has changed considerably over the last few years, most notably with the advent of Broadband in 2004. Offering much faster access times to the net than before, Broadband revolutionised the way in which people use computers, superseding ISDN technology by a considerable amount in terms of speed and in the amount of data that could be transmitted – enough to allow for TV programmes to be watched on people’s computers. A report in August 2006, it was estimated that over 70,000 UK households a week were signing up for Broadband. However, the real recent leaps forward with regard to broadband have been less to do with technology and more to do with marketing.

We’re currently experiencing the communications world narrowing in terms of suppliers, as mobile phone network providers such as
Orange and Virgin Media move in on the broadband market, but dramatically broadening in terms of what customers can do, with Wi-Fi enabled mobile phones that can connect up to the Internet or make use of a wireless router at home. People can download and/or watch favourite TV episodes either at home or via their mobiles, the music industry has dramatically changed with the introduction of MP3s and portable players such as the iPod, chat portals such as MSN and AIM are as popular as they ever were and using myspace.com has become one of the most popular ways for people to talk and interact with each other.

As such, offering ‘free’ access to Broadband Internet has increasingly becoming a way for companies to sell their services to consumers. These so-called ‘bundle deals’ are often the approach taken by larger companies such as BT, Sky, Carphone Warehouse, etc offering their main services (phone lines, TV, mobiles, etc) alongside broadband, and are an attractive offer, especially when you consider existing customers of these companies, who are already subscribers (and therefore already paying) as they would essentially be getting Broadband for free.

For anyone who isn’t a subscriber, these companies will charge a fee for the installation of either a modem, or a cable/satellite/wireless link-up to connect users to the net, which may be in addition to the monthly charges for the ‘parent’ service of line rental, such TV/mobile subscription – providers can generated money in this way, allowing them to fund their broadband operations. Existing subscribers may even find themselves having to ‘upgrade’ to broadband for a fixed fee.

This also means that BT are, and for a long time will be, in a unique position of strength in that the majority of Internet connections are made through their phone lines, many other ISPs rely on there being a BT connection in a customer’s house for their service to work, so one way or another, they will have plenty of extra revenue from line rental with which to cross-subsidise their Broadband service.

Contracts often last for a year – 12 months – although it is becoming more and more common to see 18-month contracts on offer. Such a long contact would be ill-suited for customers such as students who probably will not be residing at the same address for over a year. Being committed to a contract can often be a frustrating experience, as mobile phone users will know. Ducking out from a contract early could incur penalty charges for breaching the terms of the contract – fines that could cost customers more than any ‘free’ broadband may be worth. In contrast to this, Be Broadband‘s Unlimited package is based around much smaller 3-month contracts, which, for now, serves as a unique selling point in terms of contract flexibility.

As broadband becomes more and more common, more and more companies will be thinking of increasing ways in which to tap into an ever-widening consumer base. Virgin Media have anticipated this by seemingly offering everything that a modern mobile consumer could want – mobile phone, landline, Digital TV, and Broadband. The Broadband service on offer here isn’t free, but with the customisable deals on offer (2 for £20, 3 for £30 and 4 for £40) mean that there is potential to save more money here than what you possibly could on certain deals that offer ‘free’ broadband.

Broadband maybe free, only you’ll have to pay for something else first. As communications technology increases, and consumers demands change, this, may or may not be a bad thing.

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