Ofcom, the telecoms industry regulator that oversaw the unbundling of BT’s exchanges for use by competitors and has been asked to review the UK pay-TV market with regard to the perceived Sky stranglehold, has given BT the go-ahead to bid to supply the half-a-million plus customers currently receiving services from rival ISP Pipex.

This puts the bidding war into perspective, lining BT up for a bidding scramble with the aforementioned Sky, Virgin Media and the Carphone Warehouse, who own TalkTalk as well as AOL’s UK internet services. Orange and Tiscali, providers of ‘triple-play’ services, are also said to be keen to buy.

Following this, there have been rumours abound that Ofcom may, if it chooses to thoroughly review the pay-TV market, ask Virgin to open up it’s own cable network if it inherits the DSL services from Pipex.

BT was similarly stripped of its ‘monopoly’ status on UK landlines by Ofcom in 1999; the advent of Local Loop Unbundling (LLU) has seen the communications market change considerably since then.

Whoever inherits Pipex’s legacy will presumably also acquire the WiMax wireless network that the ISP had set up in conjunction with Intel – a great boost for Carphone Warehouse, BT and Virgin, but less of an incentive for Sky to close as deal, as they have stated in the past that they do not wish to get involved in the mobile phone market.

It is possible that an announcement on a deal may come by the end of this week; again, the main players are keeping schtum about the whole affair.

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BT have taken the broadband market by the scruff of the neck and dropped their prices for all their broadband packages. This is a bold and clinical move in the ever increasing competitive broadband sector. With Sky and Virgin Media fighting for new broadband customers, BT have made their move and will intensify the competition amongst the big players in the broadband sector.

The BT Option 1 price has been reduced to just £8.95 a month, Option 2 has been reduced to just £13.99 a month and there heavy user unlimited package, Option 3, has been reduced to just £18.99 a month. All the packages come with up to 8Mbps speeds, all have free set-up costs, include free email addresses, Wi-Fi minutes, free weekend and evening landline calls, and for extra safe surfing, Norton Internet Security Suite is also included.

These price reductions from BT have now opened the market up for other companies to decide how to counter-attack these offers. The broadband Market will be an extremely active place within the next few months and consumers can only benefit from the prices of broadband providers lowering their prices in a market price war.

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What is VoIP?

VoIP is an acronym standing for Voice over Internet Protocol, and is a technology that allows for the transmission of voice conversations over the Internet, or a similar network. Using an Internet connection to make phone calls has a number of advantages – firstly, you avoid using a landline or network and therefore avoid paying costly service charges and/or line rental, effectively allowing you to make ‘free’ calls.

Another benefit of not having to use a network or landline is that there is no problem with signal strength as such, as an Internet connection – any connection – effectively functions as the phone’s ’signal’. This means that voice calls are generally clearer and are of a better quality, although this is entirely dependent upon the strength of the connection.

This also allows for greater mobility abroad, as any Internet connection will allow you to make and receive incoming calls for no additional cost, ‘roaming’ charges. Most VoIP phones include features such as voicemail, call waiting and three-way calling, features that traditional mobile network providers usually charge for.

Since VoIP technology uses the Internet to transmit information, more and more VoIP handsets come with services which allow users to use Instant Messenger services such as MSN, AIM, GoogleTalk and Skype. There are an increasing number of Wi-Fi-enabled hotspots in urban areas in which VoIP users can make full use of their phone’s functions.

Since VoIP technology relies on an Internet connection, this too, has its drawbacks. The quality and clarity of a phone is reliant on a fast and secure connection, and although connection speeds of broadband ISPs are generally improving, problems with latency can sometimes result in a reduced quality of the call. Also if you experience a power cut in your home, you will be unable to make any calls on your VoIP phone as its Internet connection has been disabled.

To combat this, some modems are now equipped with chargeable back-up batteries which can temporarily power the modem, making sure that the connection to the Internet remains active. Some business providers of VoIP install dedicated phone connections for VoIP handsets to use in case of a local Internet connection not being available.

Another major disadvantage is in that as the calls on a VoIP are not made on a local line or network, it makes it hard to connect emergency calls to appropriate call centres, although

The number of mobile handsets that currently support VoIP is comparatively small compared with the rest of the mobile phone market, but there is every possibility that commercial versions will become available in the near future. The current providers of VoIP services in the UK are Skype, Vonage, GoogleTalk, BT, and Orange.

Skype

Skype is currently the biggest UK VoIP provider. Skype is a software program, available as a secure downloaded from their website, compatible with any computer platform that allows free calls via VoIP to other Skype members and cheap calls to normal landlines via the Internet, whilst also allowing IM, video calling and SMS/texting.

Calls can be made whilst sat at your computer, using a headset, or with a variety of Wi-Fi-enabled mobile phones (that operate in Wi-Fi hotspots) and cordless handsets available from the Skype website, where credit can also be purchased.

Vonage

Vonage is a leading provider of VoIP services, and is known simply as ‘the Broadband Phone Company’. Vonage’s Residential Premium Unlimited and Small Business Unlimited calling plans offer consumers unlimited local and long distance calling, and features such as call waiting, call forwarding and voicemail are all inclusive and part of one monthly rate.

Vonage provide phone adapters with their packages which act as interfaces between your modem, router and your phone or handset – this transfers any calls made from the phone line straight to the broadband connection. For customers who do not have a router installed, Vonage have an adapter with a built-in router. Connections are made through an Ethernet Broadband connection, meaning that if you have a BT phone line with a USB modem, this will have to be replaced with an Ethernet modem.

GoogleTalk

GoogleTalk is similar to Skype in that it exists in the form of a downloadable application that allows users to make free calls to each other over the Internet, typically through a microphone headset. Signing in to GoogleTalk requires you to register for a free GoogleMail email account. Google Talk is currently free, as the program is a beta, and is currently being mass-tested across the Internet.

BT Broadband Talk

Broadband Talk is BT’s entry into the VoIP market, offering free evening and weekend calls, as well as cheap rates for all other times (with unlimited UK calls available for under £5), cheap international rates and a reliable connection, guaranteeing clear reception every time.

New Broadband Talk phone numbers will begin with a ‘05′ code and will work over a wired or wireless broadband connection via the BT Home Hub or an existing broadband router. BT Broadband Talk requires a touchtone phone; most corded and cordless phones are compatible, but be sure to check BT’s website to see if you can sign up first. Everything else required for installation is available in the welcome pack.

Similar to Vonage, BT provide customers with phone adapters to link up to their existing connection, with router-less phone adapters for those who do not require a router pre-installed.

Orange Unique Phone

Unique Phone from Orange is the mobile network and broadband company’s converged mobile and VoIP service. Unique Phone handsets operate both on a WLAN (Wireless Local Area Network) Wi-Fi connection in the home, and the regular mobile network outside.

Much like BT Broadband Talk, the Orange Unique Phone allows for calls to be made within the home to other Orange mobiles and landlines for free, as they are routed through the Orange Livebox over an Orange broadband connection. The Livebox is a wireless hub, allowing for six devices (computers, laptops, Unique Phones) to share the same connection.

The Orange Unique Phone is available for £50 a month, and includes all the features provided by Orange’s Unlimited Broadband package, as well as 1300 free mobile minutes.

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Last week Pipex, said it had appointed investment bank UBS to search for buyers to take over their Broadband and telephone services; according to a number of reports, Virgin Media are said to be particularly keen in snapping up their ADSL network, a move which would help in strengthening the gains made by their cable Broadband service. Not only would a purchase add the existing Pipex subscribers (estimated at over half a million) to Virgin’s belt, but it would also supply the buyer with access to the myriad of WiMAX networks that Pipex had set up in conjunction with Intel – an attractive offer to any ISP with a mobile phone network.

The offer of a WiMAX infrastructure should also prove to be appealing for internet providers, as the wireless technology allows for a neat sidestepping of the troublesome ‘last mile’ problem of connecting individual customers to a network.

For these reasons, BT are also said to be interested in taking over Pipex, to consolidate its lead as the main Broadband provider in the country, simultaneously extending the coverage for its wireless Openzone network, and also to give a much-needed boost to its converged Wi-Fi mobile service, BT Fusion.

Recently, the two firms had together, along with digital TV broadcasters Top Up TV and Setanta, approached Ofcom to review the UK pay-TV market – a move seen as an attempt to break the perceived market stranglehold of Sky. Whilst presenting a united front on the TV market, these two companies could find themselves scrapping under the table over the remains of Pipex.

For the moment, this is all speculation – Virgin or BT haven’t made any official noises about this, and neither have Pipex.

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As was reported last week, UK customers who sign up with ISPs including BT, Orange, Be and Tiscali, who offer no limits on downloading, have found out the hard way that there are limits, and penalties for those who cross them.

In response to this, an online petition has been made out to the Prime Minister, calling for Ofcom and the Advertising Standards Agency (ASA) to force providers to redefine their premium services, or risk prosecution. The petition, started by Kevin Peel reads:

“Many ISP’s (Internet Service providers) are advertising Broadband with ‘Unlimited’ downloads. The majority of these services are not unlimited as in the providers fair usage policies they either cap the use at a defioned [sic] amount, or use an undefined criteria that only they know.”

So far, the petition has received over 800 signatures; by comparison an online petition against road pricing launched in February this year attracted over 1.2 million signatures, surprising ministers and provoked a significant media response.

The petition is one of many to be found at petitions.pm.gov.uk – including one with over 4,000 signatures, petitioning Tony Blair to stand on his head and juggle ice-creams – and it is unsure if this petition will have an impact. There is a certain amount of irony to be found here, consumers using the internet to formally protest against providers of internet access, biting the hand that feeds maybe, but an indication that companies may have to change how they pitch their services in the future.

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Sky have been quick to respond to Virgin Media’s recent speed boost to their premier Size: XL package, by releasing this statement:

“Virgin Media is pushing up broadband prices at a time when dramatic savings are available from other providers. Sky customers can enjoy download speeds of up to 16Mb per second for just £10 per month - less than a third of the price of Virgin Media’s fastest service. No wonder that in the last three months of 2006, Sky added almost twice as many broadband customers as Virgin Media.”

The implication here is that the Virgin deal is something of a rip-off, but as many customers of discount broadband services have found out in the past, often to their chagrin, sometimes you really do get what you pay for. At peak times when the net is congested with many users mass-downloading MP3s and other files, the difference between a 16Mbps and 20Mbps speed could be crucial.

This statement has also renewed interest in a debate over which medium (cable or ADSL) is the most suitable for an internet connection. ADSL users are more reliant on their proximity to their local exchange than cable users, who are not affected by distance as such.

However as both types of service are heavily affected by peak-time traffic, ADSL connections can be advantageous if you live close to an exchange. Cable connection speeds are more consistent with the amount of traffic in your local area; i.e. if your next door neighbour is downloading several Gigabytes of MP3 and videos using the same bandwidth as you, then your net performance can suffer due to someone else’s downloading habits – ADSL users do not suffer from this. Maybe this unique problem with cable explains why Virgin, like many ISPs, are keen to clamp down on users who abuse the terms of their Acceptable Use Policy.

ADSL customers who are isolated from telephone exchanges may welcome Virgin Media’s cable services which may give Virgin an edge over the competition in the long run, as they are currently the main provider of cable broadband in the UK.

The Virgin cable network currently supplies it services to over 80% of the UK, whereas Sky’s digital TV footprint is something around 98%, and their broadband network coverage, according to their website is “currently 50% of UK population; due to rise to 70% in July 2007″.

Whilst it is true that Sky have added nearly twice as many broadband customers as Virgin, this could be attributed to the fact that not all Sky TV subscribers can get Sky Broadband, and as Sky Broadband is included free with a TV package, existing Sky viewers are offered the option to upgrade their telly deal with free broadband as the network reaches their area - Virgin can, for the moment, supply more customers with broadband than Sky.

Whichever way you spin Sky’s comment, what is clear is that the battle between the two media heavyweights did not end with the withdrawal of Sky channels from Virgin, and is not likely to be resolved anytime soon. This could see the introduction of more incentives, like the offer of faster speeds, from both sides which is great news for customers.

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Virgin Media will once more up the stakes on the competition this summer, by accelerating the maximum connection speed of their premium XL broadband service from its already fast 10Mbps to 20Mbps, which is still a nose behind the as of yet untouchable 24Mbps speeds offered by Be Broadband Unlimited, but it also faster than the speeds offered by most ISPs, including Sky’s 16Mbps service.

A statement announced that the new speeds should be available to all Virgin customers by June and also hinted at an even faster service for the future:

“Customers can receive consistent speeds no matter where they live on our network and a top speed of 10Mb is available throughout our broadband addressable areas… We will be increasing this to 20Mb in June and we are also currently conducting a residential trial of a 50Mb broadband service.”

Commentators have observed that this has been timed to coincide with the recent Sky ad campaign, which has been crowing over Virgin Media’s lack of premium digital TV content, and has been viewed as compensation for customers who were left seething after the loss of channels.

Virgin will begin supplying this service at the end of May, for an extra £2 a month to the XL broadband bundle and will allow for users to downloads MP3s and high-quality video content (missed episodes of Lost?) much faster than before.

Virgin have not yet made any noises to indicate that faster speeds will be transferred to their economy packages, but as having indicated at the testing of a 50Mbps service, and with broadband speeds always on the rise, it is expected that customers of the Size: M and Size: L packages will be similarly furnished in the near future.

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Many providers of Broadband services keenly advertise the fact that they can supply their subscribers with an understandably attractive unlimited monthly download cap as part of a premium service, or as standard. However, as many customers have found out, sometimes to their chagrin, the term ‘unlimited’ should be taken with a rather large pinch of salt.

Most, if not all, ISPs who offer so-called unlimited downloads to their users will have on their websites and in the small print of their contracts, a Fair Usage Policy of some sort.

From the wording of many of these clauses, it is implied that this measure has been taken to curb the behaviour of individuals who constantly download large amounts of data from file-sharing sites such as Kazaa, and thus take up a large amount of the network capacity and potentially having an adverse affect on the performance of the non-premium limited services, if an ISP, such as Be Broadband does not support across the board unlimited downloads for all its packages.

Below is an extract taken from the Fair Use Policy currently on display at the Orange site:

“[Our policy is] designed to make sure your broadband service is fast and reliable whenever you use it.

Some of our broadband customers use file sharing software and download large files like music and videos. This uses up lots of network capacity leaving less available for you. If they’re doing this at peak times, it could mean that the speed of your broadband service will be affected.”

Customers who refuse to play fair and continue to excessively download are threatened with being disconnected:

“If this does happen then we’ll get in touch to help you find ways to reduce your usage. If your usage continues to be very high, we’ll get in touch again. Ultimately, if your usage still remains excessive despite our attempts to help you reduce it, we may have to suspend your service and possibly close your account.”

When you consider that not everyone uses the internet for the same purposes, this doesn’t seem like a bad idea, as it allows occasional net users, who would presumably be subscribing to a less expensive package the freedom to surf at an optimised speed.

The problems begin with the fact that the services are advertised as being ‘unlimited’ when technically, they’re not. It is impossible to tell what a provider deems to be excessive – the only way to find out is to continue surfing the net until you receive your first warning email. If you’re lucky. Some ISPs state that they will restrict access during peak times (BT), or “[terminate customer accounts without notice” (AOL).

It’s the (real world) surfing equivalent of straying too far out to sea, and being caught in a riptide due to an unclear warning system. Without any idea given as to what is acceptable or excessive use, customers can’t really be blamed for overstepping the mark, intentionally or not.

Another problem with Usage Policies is that the ways in which people surf the net have changed over the last two years. File-sharing websites are also less popular today than they were two years ago, largely due to the arrival of the iPod and iTunes, and the fact that many of the previously popular P2P sites have become synonymous with viruses and malware.

Also, with many routers and hubs allowing multiple users to share the same connection, (all covered by the same subscription) would it really be that hard for an average family with 3 or more computers to download an excessive amount?

If customers pay for an unlimited service, they should not have to worry about a download limit that they can’t see. In all fairness, casual users of the internet should be allowed to get what they pay for and surf without having their connection compromised by the behaviour of others, but in an attempt to facilitate this, ISPs may be unintentionally hurting the customers whose interests they’re trying to protect.

Unlimited Broadband services are currently offered by BT, Pipex, Tiscali, AOL, Orange, Virgin, and Be.

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Skype, the peer-to-peer Internet telephony network owned by eBay, has announced that its VoIP software has been downloaded over 500 million times since its inception in August 2003, and with 171 million active user accounts, Skype is currently the most popular provider of VoIP services in the world.

Skype was founded by Niklas Zennström and Janus Friis, the duo who created the file sharing program Kazaa, and it looks set to become just as popular and influential, if not more so, than the pair’s previous site.

Like Kazaa, Skype works using P2P networks, and provides free VoIP calls to other Skype users whilst either sat at their computer using a microphone headset, or by using any DECT phone that is Skype-compatible such as the Philips VoIP 1211. As well as free P2P VoIP calls, Skype users can also chat via an MSN-esque IM service, make cheap calls to traditional numbers, including mobiles, and allows users to create local numbers in foreign countries making it cheaper to communicate with associates across the globe. In a further comparison to Kazaa, Skype has been lauded as a threat to traditional telcos in the same way that music file-sharing sites were to the recording industry.

However, the music business is still here, the Kazaa site has been dormant for ages, and unauthorised mods and spin-offs such as Kazaa Lite and K++ haven’t exactly set the world on fire.

Traditional telcos, are also still in positions of relative comfort in the market – as an Internet connection is required to make use of Skype’s features, companies like Orange, Tiscali, BT and TalkTalk, who supply Broadband services with their phone calls and other services wont be losing that much sleep, as users will have to go through (at least) one of their parent or other services to get access to Skype.

And, with more and more mobile phones able to make use of Skype features, it seems that Skype is less likely to be a bugbear to Broadband suppliers like Virgin and Orange who run mobile networks.

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The ever-shrinking UK Broadband market could get a whole lot smaller very soon. Pipex, who have been in the ISP business for over a decade are currently looking for a buyer to take over their broadband operations.

This news comes as something as a shock, as in previous years there were all signs that Pipex were in rude health, buying independent broadband ISPs Nildram in 2004 and Homecall in 2006, repaying over £43 million worth of debt accrued by the latter.

Last year Pipex also purchased Bulldog and Toucan for the respective amounts of £12 million and £24 million, and had also announced a joint venture with Intel involving setting up a wireless network across the country similar to that of BT’s Openzone.

Pipex’s pre-tax earnings were estimated at being £5 million for 2007.

This is a sign that independent ISPs are floundering to keep up with the bigger brands like Virgin, BT and Sky, and other providers of triple and quad play services. The fate of Pipex could be decided by one of these bigger fish, (it was rumoured that BT were keen to buy Pipex last year, but this was denied) or another independent ISP seeking a merge, or its services could be snapped up by a mobile phone provider looking to get in on the multi-platform act, as O2 did last year with Be Broadband.

It is unclear as to why Pipex have decided to appoint bankers to look for a deal; the company has provided no comment on this or the rumour that one of its major shareholders had sold all shares in the company.

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