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• Summary
• Analysis: Internet non-users eager to get online
• ISP Spotlight: UK Fast
• News

In Summary

Welcome to issue 11 of UKBBMM.

This edition sees the first results from the 2,000 plus interviews for the consumer section of Point Topic's own BroadBand User Survey (BBUS). Our first piece of analysis examines interesting responses from the non-internet users, who provide some unexpectedly positive news for the broadband market. The survey reveals that more than 80% of those who plan to sign up for internet services in the near future will go straight for a broadband service. In general terms, a healthy number of respondents who currently do not use the internet view internet access as important. The survey data are also in line with the predicted total of about 7.1 million homes with broadband by June 2005 but they show a higher number of homes with dial-up access than expected.

Over the coming issues of UKBBMM we will be publishing more analysis from the survey, building what we expect to be the fullest picture yet of the broadband market in the UK. Our next analysis piece drawn from the BBUS results will focus on what the survey tells us on the issue of working from home. Please note that UKBBMM will be taking a summer break from the usual schedule over the next four weeks, resuming normal service, with UKBBMM 12, on 24 August.

We continue our profiles of UK ISPs in this issue with a report on Manchester-based UKFast. UKFast's DSL business is built around using DSL access as part of a wider package of services, and this it appears to do quite successfully. Broadband access accounts for just 10% of turnover and DSL is treated as low margin, sold as part of the overall package to business customers. Dedicated server hosting has become the mainstay of the business, with broadband access ‘bolted on’.

The nitty gritty of LLU has bubbled to the surface in the last week with Cable and Wireless ISP Bulldog passing comment on the state of BT's provisioning process for switching over customers to the LLU provider. Bulldog has been under pressure, it has admitted, over its ability to handle customer queries and complaints recently, and last week announced plans to boost the number of call centres and staff ready to handle queries. Despite the media fury – a Guardian article claimed that Cable and Wireless has passed figures showing that BT Wholesale reacts twice as fast to a BT Retail request as it does to one from Bulldog – Bulldog is holding back from precipitate action. 'We just want BT to do what it is supposed to do, then we'll be very happy,' a spokeswoman for Bulldog told UKBBMM. As well commenting on BT's provisioning procedures at last week's Cable and Wireless AGM , C&W chairman Richard Lapthorne also confirmed the company's interest in acquiring Energis.

The seasonal round of second quarter/interim company results continues in this edition with numbers from PlusNet. Broadband customers increased 68% year-on-year to 113,084 at 30 June 2005, from 67,383 at 30 June 2004. PlusNet is focusing its promotions on shifting dial-up users to broadband through a reduction in upfront costs, offering users the chance to stretch the cost of activation and modem over five years. This is producing short term pressure on revenues but the company clearly believes attracting customers to broadband will drive its long term returns. New additions in the quarter ended 30 June 2005 were 14,959, compared to 8,300 in the first quarter 2005, which the company attributes to its promotional strategy.

After a something of a lull in 2Mb announcements (See UKBBMM Edition 2 - 17 March 05) Wanadoo and BT have been falling over each to get the magic 2 Mbps into the headlines. Wanadoo apparently went first with the 2Mb rate at £17.99, the same price as BT's Broadband Basic tariff, which was also then flagged at the increased speed of 2Mb the same day. Tiscali has also come out with a July offer of £17.99, down from £19.99, on its 2Mb top rate tariff.

Two ISPs featured recently in UKBBMM have been in the news again. New ISP Be Unlimited is to offer all its customers a 'Be Box', in reality a Thomson SpeedTouch 716g wireless router, when it launches. The exact timing and price of Be's launch have still not formally been revealed, though reports indicate something in the range of £25-£30 at its 'autumn' start. While the ISP featured in UKBBMM 10's ISP profile Zen Internet has confirmed its position as the friend of all Apple Mac users with a dedicated Apple support line.

And the news that Broadband4Devon has received funding to roll out its broadband business support service throughout the county follows neatly on from last issue's report that BT was using July to bring broadband to some 26 local exchanges there.

Analysis: Internet non-users eager to get online

Internet take-up in the UK is already higher than usually assumed. Many households without Internet access today are eager to get online, and are likely to go straight to broadband. These findings are good news for everybody who wants to see continuing rapid growth of Internet usage and broadband take-up in particular. They are some of the first results from Point Topic’s first consumer BroadBand User Survey (BBUS).

The Point Topic survey found that 65% of the households surveyed had access to the Internet from home by June 2005. This is at least 4% higher than would be expected from the figures and growth rates quoted by Ofcom. It also means, contrary to some recent claims, that the number of homes with dial-up access is still greater than the number with broadband.

Point Topic estimates that about 7.1m homes, or 29% of the total in the UK, had broadband access by June 2005 and this figure is borne out by the survey results. The survey suggests that another 8.8m homes still rely on dial-up access. This is encouraging news for ISPs aiming to build their broadband customer base by migrating users from dial-up.

Also encouraging for the growth of broadband in the UK is the degree of enthusiasm and capability for getting on the Internet from respondents who don’t yet have it. 43% of non-user respondents said it was “very” or “fairly” important for them to have access to the Internet. 30% said they were “very” or “fairly” likely to get access to it from home in the next six months.

The respondents without home access also claim to have good knowledge of the Internet on average. 50% rated their personal knowledge of the Internet as “good” or “very good”. Only 14% said they had never used a PC at all.

Even more encouraging for the broadband industry, a massive 81% of users who are likely to get Internet access say they will go straight to broadband. Only 4% explicitly said they would choose dial-up access. (The rest were “don’t know”, “other” etc.)

BT’s various brands ranked highest among the likely choices for getting access, mentioned by 55% of respondents. The cable companies, NTL and Telewest, came next with 36% between them, followed by AOL with 30%.

Some degree of bias is inevitable in a survey of this kind. Older people, who are much less likely to have or to get Internet access than the population as a whole, are under-represented. People who have Internet access, or are interested in it, are more likely to agree to be interviewed. Even so the survey suggests that there are more dial-up Internet homes in the UK than is usually assumed, and that many non-users are eager to join the Internet community.

The survey was carried out by Recom Research for Point Topic’s BroadBand User Service between 6 June and 7 July. A total of 2017 face-to-face interviews were completed based on a quota sample covering the whole UK.

ISP Spotlight: UKFast

This profile was the result of an interview conducted at UKFast’s central Manchester offices, with Lawrence Jones, Managing Director.

UKFast was founded in 1999 by Lawrence Jones and Gail Everton (who has since become Mrs Jones). Jones is clear that managing a niche ISP is not about selling access services, but about using access as a means of connecting customers to critical services. DSL, therefore, is a means to an end and the modus operandi of UKFast offers a model for what small ISPs can do to compete and survive.

UKFast is not a big ISP, but it has been incredibly successful at creating an illusion of scale by means of a string of industry awards (ISPA Best Hosting Provider 2005, Web Host Directory’s Number One Windows Hosting provider 2005, Future Publishing’s Best Business ISP 2004). UKFast is also the technology sponsor of Sale Sharks RFC and it individually sponsors Charlie Hodgson, the Sale and England fly-half. UKFast works hard at its PR and has been quoted 19 times in the local, national and trade press since August last year and it generates an impressive and unrelenting stream of press releases, which keeps its profile higher than its size might otherwise warrant. This is part of a clear strategic focus. In an article in June’s B2B Marketing magazine, Jones says it is imperative that he sells the company culture and personality of UKFast. The same article quotes Jones further: “When we target a company, we pick up the phone and we speak to them. We have a chat and invite them out to an event. We might take them to the rugby, cricket or football. We find out about them as people and they get to know us…..This strategy plays to our advantage massively. It is different to everyone else in the market – most people don’t do anything like it”.

Clearly UKFast’s proposition is not aimed at the mass market and Jones is clear that applications and services are where the money is. Broadband access accounts for 10% of turnover and it is fair to say that DSL is treated as a low or no margin value-add, sold as part of an end-to-end solution to business customers. Dedicated server hosting has become the mainstay of the business, with broadband access ‘bolted on’. DSL was launched in May 2003 and a proportion of the DSL customers served are managed through UKFast’s Reseller Plus programme on behalf of a network of VISPs, of whom about 300-400 are active.

Turnover has doubled year on year since inception, without incurring debt and without the need for external investment. UKFast now boasts a nationwide client list which includes Littlewoods, Dollond and Aitchison, Royal & Sun Alliance, the Australian High Commission and Weetabix. Jones is ambitious and talks of building the business to levels of £100 million a year turnover. He recognises too, that this will most likely happen by acquisition and he is actively looking for opportunities in areas such as VoIP. Other areas in which Jones sees real potential are video-conferencing, contact management, bulk email and gaming – anything in fact which involves the resilient management of data traffic, rather than access itself.

Figure 1: UKFast at a glance

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