Tuesday, May 05, 2009

No bandwidth please, we're British

BT's CEO got the virtual equivalent of a mass Glasgow kiss (definition) for his recent Ford vs. Ferrari comments. But events have proven he's partially right - only 75% of Virgin Media's new customers want 10Mbps or more, suggesting that the other 25% are content with 2Mbps. This segment of bandwidth prudes could be an incremental growth target for UK ADSL players, as ADSL has proven it's fully capable of delivering 2Mbps, mostly (see point 1.8 on page 3). 

But they'd better hurry - Virgin no longer even markets its 2Mbps product, and the remaining 2Mbps customers are going to be dragged kicking and screaming onto 10Mbps packages from this month. 

Nice to see the cable industry finally doing what I have always believed it could and should do: use its network advantages as a blunt weapon to batter telcos with (Telenet results also show a similar trend and tone - 78% of subs are >12Mbps). In cases where the incumbent is unwilling or financially challenged to respond (4.8x leverage is a steep hill to climb), things are going to get very, very ugly

This does nothing to bring closer the demise of the bete noir of asymmetry - this person felt strongly enough about the issue to devote a blog entirely to it, but apparently gave up out of despair. (I recently set up a YouTube channel, and people, let me tell you, the upload times are excruciating.)

Still, it's interesting to ponder that telcos who have enjoyed relatively benign financial climes in days-gone-by avoided making the investment in preference for M&A adventurism, share buybacks and dividends, only to find themselves now under duress to play catch-up in much less forgiving conditions. I've heard this story somewhere before

3 comments:

Simon Cast said...

I wonder if that is due to people no longer believing the 2Mbps vs 10Mbps difference. I can see the question "Why signup for more expensive 10Mbps when I'm only likely to get 2Mbps anyway?" being asked quite a bit.

This might easily be a case of bad marketing coming back to bite the ISP industry in the arse. Somewhat poetic, i think.

Hermes said...

When you consider that the vast majority of speed complaints made to any ISP helpdesk are actually down to customer equipment (routers, modems, PCs that haven't been optimised for higher speeds), it's a tough one for the ISPs if they are increasing speeds and people aren't believing them and/or aren't getting the speeds because of it.

Layer on top the amount of crap speedtests (so many of them don't accurately show the speed) and it becomes a self-fulfilling prophecy.



H

www.thehermesproject.com

Ignition said...

Was taking too long to upload the new updates James :)