Broadband postcode charges fuelling ‘class war’
May 31, 2007 at 10:31 am
Millions of broadband customers across the UK have to pay extra for the service because they live in the ‘wrong’ area, according to uSwitch.com.
The independent price comparison website last week identified AOL as the latest in a growing line of internet service providers (ISPs) that have adopted a pricing strategy which includes an additional minimum charge of £10 a month for customers living outside the provider’s LLU network (local loop unbundling – the leasing of wires connecting customers to the closest exchange, by BT to ISPs).
By installing their own equipment into BT exchanges (the process of LLU), ISPs have achieved a greater level of control and flexibility over the prices and speeds that they offer their customers. Broadband prices fell by 17 per cent last year as a large array of highly competitive deals hit the market.
The problem is that only 1.5 million of the UK’s 13 million broadband connections are currently unbundled. Additionally, only 45 per cent of the population can access the cable network which was recently acquired by Virgin Media through its buyout of NTL. With Virgin currently providing internet services to 3.4 million homes, this means that there are still 8 million households connecting to the internet over the standard IP Stream network owned and operated by BT.
AOL’s new two-tariff system, which was implemented towards the end of May, offers customers within the LLU network a 2Mb service for £14.99 a month and an 8Mb service for £29.99 a month. However, customers living outside the LLU network are expected to pay £24.99 and £39.99 respectively for exactly the same connections.
TalkTalk, Sky, UK Online, Virgin Media and now AOL all differentiate the price and speed of the service they offer depending on where people live. It is estimated that 40 per cent of the population lives outside of the LLU networks used by these broadband providers. Customers buying their broadband from these companies are paying a minimum of £120 a year for the same service as those living within the LLU network.
“The new tariffs introduced by AOL bring into sharp focus the digital divide that is forming between LLU and non-LLU households,” explained Steve Weller, head of communication services at uSwitch.com. “Unfortunately, AOL is not the only company to penalise households not falling within their unbundled network.”
“It’s simply not acceptable that one customer may be paying £19.99 a month for a service of up to 1Mb yet their friends down the road could be paying just £14.99 for a 2Mb service – as is the case with UK Online – just because their postcode happens to fall under their provider’s LLU hit list,” he continued.
Customers living in rural areas tend to face the most discrimination, explained Weller, because ISPs cannot make as much from their investment when there are fewer homes connected to each exchange.
“People living in the country are effectively second class citizens in the eyes of broadband operators,” he said. “We are calling for this new ‘postcode lottery’ practice to be halted in its tracks before other providers join in, denying more consumers the chance to benefit from the great deals that are currently out there.”
BT Broadband is nation’s favourite
May 30, 2007 at 10:18 am
BT has been re-crowned as the nation’s favourite broadband retailer, after new figures reveal that it now provides for 3.66 million customers, 26 per cent of the overall broadband market.
Posting its profits for the first quarter, BT indicated that it had received 245,000 new broadband customers on top of the 195,000 gained through the acquisition of PlusNet. Snaring 29 per cent of all new broadband customers in the quarter ending March 31st, BT was able to wrestle the top spot back from Virgin Media (which now owns NTL).
Ian Livingston, chief executive officer of BT Retail, said: “I am delighted that we have regained the top slot as the nation’s favourite broadband retailer. Customers have shown what they clearly want: innovative products and services offering great value that are easy to use and deliver the exciting opportunities that broadband can provide.”
Commenting on BT’s quarterly results, Jason Lloyd, head of broadband at moneysupermarket.com, said BT’s impressive £2.5 billion share buy back would dominate headlines, but that the main story from the report was its movement back to first position in the broadband retailer charts.
“The battle between Sky and Virgin Media has had them too focused on each other, allowing BT to concentrate on delivering broadband to its customers without distraction,” he said.
“While the growth of Sky and Virgin Media has come mainly through price-driven offerings, BT has refocused on providing a reliable broadband product with good customer service.”
Virgin Media was able to add 89,000 broadband customers to its core subscribers in the first quarter, but reported an overall loss of £15.3 million after losing television customers to Sky.
