Industry experts are predicting that British Telecom will
drastically reduce the cost of its broadband Internet services when
it announces its third-quarter results on 7 February.
The move will follow a warning from analyst group GartnerG2 that
businesses planning to roll out broadband Internet services should
hold back investment.
Following a survey in France, Germany and the UK, GartnerG2 has
warned that consumers are not prepared to pay a premium for
broadband. "Unless prices come down dramatically," the report
states, "only 10% of households in France, Germany and the UK will
have broadband Internet access by 2005".
Gartner noted that e-marketers and businesses, such as automotive
manufacturers and clothing retailers, are anxious for broadband use
to grow so they can use richer marketing material, such as
high-resolution photos and revolving 3D graphics on their Web
sites.
However, "given current market conditions," the analyst group
recommends businesses "continue to optimise Web sites for
narrowband access, delay investments in broadband Internet content
and use rich media advertising sparingly".
Microsoft chief Bill Gates hammered home the same message when he
spoke at the World Economic Forum in New York last weekend. The
high cost of broadband is holding back demand Gates warned.
Broadband costs for the US's 13.8 million users have risen by
around 20% in recent months to approximately £40 per month.
In the UK broadband costs £40 to £50 per month and GartnerG2 argues
that this must fall to less than £20 per month to drive widespread
adoption.
The stakes for the UK are high. GartnerG2 said 34% of UK households
currently have Internet access compared to 27% in Germany and 18%
in France. However when it comes to broadband access, Gartner found
only 9% of online German households were using broadband compared
to 8% in France and just 2% in Britain.
The slow uptake of broadband in the UK is also likely to feature
heavily in the House of Commons tomorrow when BT chairman Sir
Christopher Bland, Energis chief executive David Wickham and AOL UK
chief executive Karen Thomson, give evidence to the Culture, Media
and Sport select committee.