The Broadband Giveaway!!

[3GScottishUser]

Funny how things work out sometimes.

That bit of copper that attaches your phone to the exchange is the same bit of copper that has been there for years for voice calls now it can carry data at high speed and for the privilage BT has milked it with customers paying up to £30 a month for what is essentially the same bit of cable!! OK there will have been some infrastructue investment but I doubt if that could justify the monthly charges that existied originally when broadband appeared. Reality has now bitten and as prices tumbled, connections rocketed and we are now at a stage where LLU broadband is so cheap that it can be used as a freebie to gain access to the line rental revenue or another associated product or service.

Free broadband is now a reality. First Carphone Warehouse used it to promote Talk Talk, then Sky jumped on the bandwagon to fend off the arrival of TV distibution by broadband technology. Now the mobile operators are moving fast to protect their core business. Orange was first with a deal with Energis (a division of Cable and Wireless), next up will be 02 who have their own ISP which they recently paid £50m for and now it reported Vodafone will partner with BT to provide IPstream to their customers.

Convergence is happening fast and with 3 major mobile companies now actively pursuing fixed line broadband it'll be interesting to see how this development affects market shares. 02/Telefonica are well placed to make revenues from taking over landlines through LLU rollout. Vodafone appear to have done a clever deal with BT where their user base will bring BT basic broadband customers who can then buy additional services like VOD and VoIP for which Vodafone will no doubt get a commission from, without a single penny of investment! Orange appear happy to provide C&W's broadband simply to protect their core mobile business but their Livebox has expansion facilities which could also be used to deliver new enetertainment services which would be rewarded with a share of revenue from when marketed to their own customers.

Meanwhile over at NTL/Virgin they have launched the first quad play product. TV, Landline, Internet and mobile for a single monthly cost. The major problem for NTL is that they dont have the geographic coverage that the BT network offers and they may have to come to some arrangement to make broadband available for customers who live in non-cabled areas.

So who is left out?

Well T-Mobile seems to have ignored consolodation to date. They will be watching the market carefully and may just pounce and make a big acquisition if they think convergence threatens their long term plan of being up there with Vodafone, 02 + Orange. They could buy Cable and Wireless easily but are also big enough to swallow BT and that move (already rumoured) has the potential to be the most significant maket shaker to date with profound implications for Vodafone who may have to get into a bidding war for BT to prevent the German giant becoming the UK's most dominant telco.

Hutchison have taken a long time to embrace the Mobile Internet in the UK but have recently been reported as looking at the possibilty of a tie-up with an ISP to offer converged services. AOL looks too big a meal to swallow with the company struggling to maintain the small market share they have but a deal with a smaller player might bode well for them. Perhaps some arrangement with CPW could be benefitial for both parties, perhaps CPW might even go the whole hog and agree a merger or takeover to become a real multi-platform compeditor to what looks like becoming common, the converged landline, Internet, VOD and Mobile companies.

I have posted a poll re convergence at the top of this page. Feel free to leave your vote and any comments below.