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If digital connectivity is essential, why are consumers okay with slow broadband?

FarrPoint's Darren Kilburn explains why slow broadband shouldn't be the norm, and the dangers of accepting poor quality connections on consumers and businesses alike.
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Can you imagine finding it acceptable that every time you use the kettle, the picture on the TV loses quality or switches off altogether? Or, first thing in the morning, when everyone on your street is trying to get ready for work, the water comes out of the tap or shower at intermittent speeds and pressures?

I would guess not. Yet the technology that underpins the definition of our world as modern – access to the internet over broadband infrastructure – is plagued by similar problems. Why?

We are all too familiar with the frustration of buffering when streaming video content, using social media or completing a transaction online. For many the reaction is not to complain to the network or service provider, but rather to accept, uncharacteristically, that “this is just the way the technology works”.

Perhaps its modern-ness creates this tacit acceptance of poor quality; perhaps we are, with the exception of the younger consumer, still amazed by what can be achieved by technology. This pervasive acceptance of poor quality as the norm does more than just perpetuate poor service, it has a financial impact on consumers too.

For those unwilling to accept poor broadband services and speeds, there is an option to pay more for higher bandwidth and better services. This seems like the traditional economic model, where an understanding exists that quality follows price. But here the consumer is extending their financial commitment in order to achieve the acceptable range of services that should be available at a lower price point.

If consumers take a 24Mbps service because they need 24Mbps but receive, on average, 12Mbps then they may be inclined to take a 50Mbps service to ensure they receive the 24Mbps they need. Poor service at lower price points begins to look like a marketing tool for more expensive packages.

What consumers pay and what they receive in return is difficult to judge in this unmetered product set. For both gas and electricity, the consumer pays on a unit basis, plus a contribution for the network used to bring the service to their homes. The more they demand from the network, the more they pay.

The impact that bundling services has had on broadband service providers is to encourage consumers to pay for services to meet their personal peak demand.  Consumers pay an “always on, peak demand” price, but the providers struggle to meet this peak demand. The equation is not balanced and nor will it be in a bundled environment.

So perhaps a more utility-based approach should be used with regard to broadband access, with consumers paying for what they use. But why does this matter? We have been here before in the telecoms sector. There was a time when using a mobile phone was a bit of a lottery, when quality and connections were nowhere near as good as today.

The market developed, technology improved and prices fell. If consumers wait it out, broadband may similarly improve. However, unlike mobile phones in the 1990s, the existing poor quality of internet access is becoming normalised.

Meanwhile, government is encouraging online access in order to speed up service delivery for citizens and improve cost effectiveness for the Exchequer. With many services such as HMRC migrating to online platforms, access to the internet is now the standard interface for contacting institutions. This creates a divide between those with and those without internet access, leading to socio-economic disadvantage across our society.

The difference between completing forms online (requiring a stable internet connection) and accessing services via post or telephone, could mean delays in service measurable in days. In setting the trend of moving services to a centralised online platform, the Government must do more to ensure that those who most need it have access to these services.

Paying a bundled charge combined with poor quality broadband that perversely drives consumers to more expensive packages is creating a barrier to entry for certain societal groups. And as more services move online, those unable to access the internet find themselves increasingly isolated.

Several options could be explored to narrow this socio-economic divide. We recommend a review of bundled versus metred approaches in charging for internet access.

Additionally, we recommend a review of the end-to-end value chain looking at the distribution of costs and charges, ranging from consumers to infrastructure providers, service providers to content providers, who are driving consumer and bandwidth demand.

We fully support the recognition by the National Infrastructure Commission1 that, “Digital connectivity is now an essential utility, as central to the UK’s society and economy as electricity or water.” With society so reliant on the internet and connectivity, now is the time to create a set of utility based policies for better broadband infrastructure that meets everybody’s demands and pockets.

Darren Kilburn is principal consultant of policy at FarrPoint.

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