BT fends off broadband broadsides

Demand for always-on internet access is increasing, but BT is accused of inhibiting uptake in the UK.

Broadband is once again becoming a hot topic in the IT industry, as more and more firms recognise the need for increased bandwidth and always-on internet connections in their everyday business.

But some channel players are claiming that small to medium sized enterprises (SMEs) are getting a raw deal in the UK compared with their counterparts in Europe.

Back in June, channel players called for BT to help increase UK take-up by opening up more Asymmetric Digital Subscriber Line (ADSL) exchanges. According to recent market figures, the UK has the second-lowest rate of ADSL adoption in the developed world.

Currently there are just over 1,000 ADSL-enabled local exchanges in the UK, which still leaves more than 4,000 local exchanges unsupported, according to figures released by BT Wholesale earlier this year. This lack of ADSL-enabled exchanges seriously hampers efforts to encourage a wider take-up of broadband across the UK.

"Broadband in the UK is nowhere near as advanced as it is in Europe," said David Reynolds, business development manager at reseller Star Computers.

"BT is not doing a very good job at encouraging SMEs to take up broadband, and Europe is a lot further ahead in the roll-out of broadband and internet access.

"When talking to the likes of BelgeCom and Deutsche Telecom, the installation figures are phenomenal compared with the UK, where BT has priced installation quite high to protect its ISDN revenue."

Reynolds explained that a "two-tier" economy is being created in the UK, with big and medium-sized companies - which already have leased lines - embracing the technology. But SMEs are getting left behind.

"The SME market is difficult to address because it always has cost in mind rather than effectiveness, and it is often difficult for resellers to make them change their mind," he said.

Crucial channel role
Veronique Trinckvel, director of the services pro division at French internet provider Wanadoo, maintained that the channel's role in encouraging broadband take-up in France is vital, with indirect sales accounting for 60 per cent of the business.

The French business community also has a much higher broadband take-up compared with the UK. "We are expecting a total of 1.3 million ADSL connections by the end of the year, with 700,000 currently connected," said Trinckvel.

An SME in the UK could expect to pay around eight times more for installation than in France. BT's Business 1000+ broadband Ethernet package costs £260 for BT installation and a rental of £119.99 per month. An optional fixed IP address costs an extra £10 per month.

Wanadoo's equivalent is a €50 (£31) installation charge and a monthly rental of €130 (£83) a month. Extras include a €15 (£9) monthly charge for a domain name and a €30 (£19) monthly charge for an IP address.

But despite the price difference, BT claims that it will have one million broadband customers within a year. At present it has just 300,000.

Paul Reynolds, chief executive of BT Wholesale, said: "Demand has more or less tripled since the early part of this year, and the target is a million lines by summer next year. I am absolutely confident that we are on track to meet that target."

One firm which is getting heavily involved in the broadband arena is Microsoft, which recently partnered with internet appliance vendor Right Vision and Star Computers to offer UK businesses a range of Windows-based servers capable of delivering broadband at all levels (see below).

Bringing value to broadband
Bruce Lynn, director of network service providers at Microsoft, said: "The key is bringing real value to broadband, and Microsoft is working with network service providers to look at the broadband landscape and thinking how to apply the technology.

"The UK is never going to be as fast as anyone would like it to be in terms of broadband take-up, but in reality BT is one of the most aggressive companies in the world when it comes to pushing ADSL to businesses.

"That aggressiveness can only spread and cause a knock-on effect, and soon broadband will be in every conversation and will have the same impact that the internet has had. Broadband is such a big area and is rife for plenty of controversy, and high level statements about how the UK is getting a raw deal.

"But if you look at different countries around Europe, they have different economic profiles and differ in how the web has evolved."

From a channel perspective a BT representative suggested that internet service providers (ISPs) and resellers get a reasonable deal, claiming that prices are no higher than anywhere else in Europe.

"BT would wholly [deny] any claims that customers are being ripped off when it comes to broadband," he explained. "BT sells broadband wholesale, via our BT Wholesale division, to other operators and ISPs for just £14.75 a month.

"There are many companies selling broadband and many ways of providing broadband, via cable and satellite, and although the market is young it is competitive.

"A price of just £14.75 a month wholesale is certainly not high and compares well with our peers in Europe and further afield."

BT has made a huge investment in terms of technology and promotion of broadband, the representative added.

However, Clive Longbottom, service director at analyst firm Quocirca, disagreed. "The broadband environment in the UK is still aimed mainly at the consumer, and even the SME offerings tend to be built around highly contended solutions," he said.

Longbottom added that the majority of solutions still provide only a floating IP address and have restrictions on running websites and FTP servers against them, and the asymmetric nature of the speed capabilities make this "difficult to picture".

On the issue of pricing, Longbottom said that ISDN is highly priced to maintain revenue on normal analogue lines, and ADSL must remain high to try to maintain ISDN revenue.

"Compare this to Germany, where it is difficult to get an analogue line any longer and where they are pushing like mad to get everyone over to ADSL as soon as possible," he said, adding that BT also tried to minimise the way in which it makes ADSL available.

According to Longbottom, resellers must find a provider that can supply ADSL with a fixed IP address and no restriction on usage. This will allow the ADSL modem to be installed and integrated into the SME business. It will also mean value-add opportunities to provide firewalls and configuration, along with managed virtual private network sales.

"Basically, in the UK we have a combination of poor quality, atrocious support, low actual bandwidths and a captive market," he said.

A clear view for SMEs
French internet appliance vendor Right Vision has teamed up with Star Computers in an exclusive distribution deal to supply a range of Windows-based servers to SMEs in the UK.

Right Vision, which already supplies the servers to European countries, also supports the Linux platform and works closely with ISPs, such as Wanadoo in France.

Grouped under the Eye-box title, the servers on the Windows platform, capable of handling broadband, are First Office, aimed at small office/home office (SoHo) users, and Max Office, aimed at SoHos and SMEs.

The firm offers several packaged solutions in the Windows range for ISPs and application service providers (ASPs). On the Linux platform the servers range from the Eye-box Max (SoHo), Eye-box One (SMEs) and Eye-box Pro (ISP/ASP).

Fabien Mouton, international operations manager at Right Vision, said: "We aim to simplify the internet for SMEs to get access to the web, so we have created our plug-and-play Eye-box devices."

The product provides everything necessary for a company to manage internet services, he added.

In the past Right Vision's products were solely Linux-based, but the firm decided to partner with Microsoft to provide a Windows-based solution after demand from end-users.

SUMMARY

• Companies are increasingly recognising the need for always-on internet access in day-to-day business.
• Recent figures suggest that the UK has a very low adoption rate for ADSL, which is crucial for broadband access.
• Some critics argue that BT is still dragging its feet over converting exchanges to ADSL technology.
• BT vehemently rejects this claim, although its charges are relatively high.