Is broadband the future of e-commerce?

Written By: Andrew Quinn for World of ADSL (http://www.world-of-adsl.com)

---

You would be forgiven for thinking that the technology for Broadband/ADSL was a relatively new development. Broadband is the new buzz word in business and home user circles. The industry has finally woken up to the huge benefits this technology can bring both to its business customers and a growing army of home users. At present, every computer magazine you pick up carries at least one main feature about broadband or ADSL. The cable companies have also jumped on the bandwagon, with Telewest, for example, rebranding itself Telewest Broadband. Most of the major ISPs have launched their own broadband service. This now appears to be their main focus in respect of internet access and they are pushing broadband in preference to their still highly subscribed standard dial-up services.

The most FAQs we are asked are: What is ADSL? and What is so different to my normal dial up service? ADSL stands for Asymmetrical Dynamic Subscriber Link. Basically, it turns your standard BT phone line into a super fast internet line which can handle voice and data. Why is it so good? It is not difficult to see why ADSL is so good; anyone who has sat in front of a computer screen waiting for a web page to load or for a file to finish downloading will understand what is so good about ADSL. However, once they have ‘surfed’ the Internet using ADSL/Broadband for access they will WANT to be a part of this growing revolution. A standard ADSL 512kbs line will give you speeds up to 10 times faster than your current dial up service.

Web pages that ‘magically’ appear, files that download in minutes rather than hours and no endless waiting for your connection, as you are ‘always on’, connected to the Internet 24/7. It is a totally new and enjoyable experience with the added benefit of features like live streaming video and audio, low latency internet gaming and much more. One of the most noticeable advantages of broadband over a standard dial-up connection is the ability to transmit voice and data simultaneously over the same phone line; no more missed phone calls or complaints from relatives that they have been trying to ring you all night but “your line was constantly engaged”.

E-commerce will be the future for many sectors of business not only in this country but world-wide and it is finally getting the respect it deserves; this method of business must be embraced if its full potential is to be realised. Many of the .com companies that were so prevalent 12 to 18 months ago have gone to the wall, leaving a strong base of companies that conduct their business solely using e-commerce solutions and strategies. Consumer confidence in using the Internet as an on-line shopping centre has been boosted by increased security and general familiarity in using the net in this way. This upturn was shown clearly in the amount of businesses using an e-commerce solution during the last Christmas shopping period.

Another factor which should see a big uptake in businesses swapping over to Broadband will be the potential savings in their telecom budgets. For example, before the launch of Broadband/ADSL, businesses were paying out thousands of pounds a year for leased lines or for ISDN for their high speed internet access. However, with the advent of broadband technologies, businesses are making a huge saving in the cost of their telecommunications setup. Before ADSL, your options for high speed internet were mainly limited to paying the high price of having either a leased or an ISDN line installed.

For example, a company in central London was paying approximately £7,000 per annum for a 128kbs ISDN line with call charges; the same company now has a 2mpbs ADSL Line, installed for around £2,000.00 per annum.

The figures for home users/businesses switching to ADSL/Broadband speak for themselves. Worldwide there are now approximately 46 million subscribers connected to the Internet. This represents an increase of 14 million subscribers in the last 12 months. In the UK alone there are now over 750,000 subscribers and this figure is expected to increase to 1.1 million by the end of 2002. These figures represent a massive potential market for e-commerce businesses which cannot be ignored.

So why did the UK launch of Broadband/ADSL in 2000 go virtually unnoticed. There were three main reasons for this low key start. Firstly, there was practically no pre-launch advertisement campaign to support the release. Secondly, only a minority of customers were actually able to obtain Broadband/ADSL owing to the small number of exchanges that BT had been broadband enabled and thirdly, the price! It was just too expensive. At start up, you were expected to pay a minimum of £40.00 a month and a £150 installation fee. Also, you were tied to minimum 12 month contract with your ISP. It is now possible to have an ADSL connection up and running for as little as £18.95 per month including V.A.T, with activation charges as little as £58.00. The price reductions have been further helped by the introduction of “Wires Only” in December 2001. This service allows the home/business subscriber to choose their own hardware rather than being stuck with the standard modem provided by BT; this means that small businesses can now set up internal network for their offices using just a standard ADSL connection.

The biggest complaint we get in respect of ADSL/Broadband is that it is only available to a lucky few. To date, British Telecom has upgraded 1,115 telephone exchanges to receive ADSL services. BT claims to now have 66% of homes and 68% of businesses connected to a BT ADSL enabled telephone exchange. These figures have been helped by the introduction of RADSL which extended the inclusion zone from the exchange from 3.5km to 5.5km.

So, how does BT decide which exchanges to enable? Basically, BT has set up a registration system for each of its exchanges. When the number of people registered as wanting an ADSL connection reaches a preset trigger point, BT will enable that particular exchange, usually within three months. The trigger point for an individual exchange can range anywhere from 200 to 750 subscribers. This system will seem unfair to many people, especially those living in rural areas to whom the prospect of them being able to receive ADSL/Broadband are very poor. Unfortunately it is a simple question of economics. The cost of upgrading the exchanges is huge and as BT is not a charity it will not bear the cost of upgrading every exchange so that a handful of subscribers can have access to ADSL. There is nothing sinister in BT’s decision; it is the same decision that all companies have to make. Nobody complains because the major supermarkets prefer to site their stores in areas of dense population rather than in sparsely populated rural areas, so why should it be any different for BT? It is just good business sense.

In recent months the Government has made a great play about wanting everyone in the country to be on-line within the next few years but to date have not offered any practical assistance to enable this to become a reality.

BT, as part of their on going modernisation programme will eventually roll out all the exchanges to make them ADSL-compatible but we are talking many years down the line from now.

We feel that it is imperative that this programme is speeded up so that anyone who wishes to subscribe to ADSL/Broadband has the opportunity to do so. This is why the Government must intervene and assist in a practical way and not just in an advisory capacity. Much of the future economy of this country will be based around e-commerce and if there is not a solid base in place, as has happened in many other sectors, we could easily be left behind.

Until this situation is sorted out, people wanting ADSL/Broadband in an area where BT has no immediate plans to upgrade the exchange have a number of options if they want high speed internet. Firstly, they can set up a trigger list in their area to try and reach the required number of subscribers. Secondly, they could try one of the following alternates to ADSL: Cable Modem, 1-way satellite, 2-way satellite, mesh wireless, wireless Points-to-multi Point.

Satellite broadband is available throughout the UK. Unfortunately, it is very expensive; for example a 500kbs single user’s service will cost £899 for installation and equipment charges and a monthly payment of around £59.99 a month. These prices are more than the average home user would be willing to pay for a broadband service. Businesses in rural areas may find satellite Broadband to be a cost effective way of obtaining high speed internet depending on what it is to be used for.

What the future holds for Broadband/ADSL in this country is hard to predict at this time. We have seen a phenomenal growth in the number of subscribers in the last 12 months. However, with the right assistance from the Government this number can be greatly increased and place Britain at the forefront of the e-commerce revolution which will eventually change the way we conduct our business, for good.