Broadband for £9.99! (13 Apr 2005)

UK Online makes most of LLU - Virtually uncapped services too

UK online has shaken the pricing models of UK based ISPs to the core with the launch of a 512kpbs service for just £9.99 a month. Additionally 2Mbps is reduced to £19.99 and 8Mbps to £29.99. There is a setup fee of £25 for the 512k and 2Mb or £50 for the 8Mb, with a 12 month minimum contract. There is a free modem for the 512k and 2Mb, and free wireless router for the 8Mb.

UK Online are effectively offering an unlimited use service too. Their terms and conditions show a limit of 500GB a month, applied to all service tiers. That effectively, as far as AntiCap is concerned, allows all but the craziest users to make unrestricted use of the service.

The big catch is you have to be in an area where UK Online, using Easynet's network rather than BT Wholesale, have installed their own kit at the exchange. These price cuts are only available as a result of cost savings to the ISP through Local Loop Unbundling (LLU).

OFCOM's LLU policies may finally be showing some fruit in bringing broadband prices down. In areas where LLU is not available, ISPs are stuck with the more costly BT Wholesale network. For a long while, according to many reports, the UK has had one of the costlier broadband markets in Europe.

The issue is where this price cut leaves the other ISPs. For those lucky enough to live in an LLU enabled area then great. For the rest of us, we are still stuck on the higher prices. Where ISPs still have to pay BT for the wholesale bandwidth, the opportunities for price cuts are limited, since OFCOM is keeping the BT wholesale prices a little higher so as to make LLU cost effective. Average customers may not appreciate this technical background, and just want the cheaper prices.

Some ISPs will argue that this new price level is unsustainable. They may claim that support services, contention ratios and bandwith availability will all deteriorate. UK Online must have done some sums, and believe it is achievable, probably relying on turnover generated by large subscriber numbers. Smaller ISPs may not be able to match this pricing as their economies of scale may not offer such resources. They will have to compete by offering niche specialities and services not normally available from the bigger players. Meanwhile large ISPs may have to take notice of these low price points for a virtually unlimited use service.

AntiCap watches the continuing development of UK Broadband with interest. It's great to see some ISPs still believe that capping is not necessary on great value broadband.