ISPreview - Evolving ISP Networks & Internet TV
High Expectations for Low Prices
By: Mark Jackson - Jan 16th, 2008 : Page 1 -of- 2
"Part of the problem stems from consumer expectations, which have grown in the face of increasingly cheap packages from the major players"

Many would agree that the emergence of super cheap broadband packages from some of the countries largest providers has helped to open up the UK’s Internet access market by making it more affordable. However the gradual emergence of super low-cost options hasn’t been greeted with universal approval, and smaller ISP’s in particular are beginning to feel the pinch.

Part of the problem stems from consumer expectations, which have grown in the face of increasingly cheap packages from the major players, such as Tiscali and TalkTalk. This, when coupled to aggressive advertising, essentially resets the customers’ definition of value to levels that can be almost unattainable for smaller rivals. In doing this the largest players have succeeded in cornering the market, but at what cost to quality?

We tell the truth to our customers. Every package has usage limits. The simple truth is that a pipe (34mb or 622mb) can only handle so much,” says David Mitchell, Commercial Manager for UK ISP Quik Internet (www.quikinternet.co.uk). “So, when an ISP offers unlimited usage but without quality promises, you know what you're getting. You are getting a mass of users, many wanting many GB [GigaBytes] of usage, at fast speed. Simply put, PHYSICALLY IMPOSSIBLE TO DELIVER!

Thankfully providers often attach Fair Usage Policies (FUP) to their broadband products, which are designed to outline service restrictions. Unfortunately these policies are frequently far too vague, usually leaving consumers none the wiser about their packages limitations. Add to this the growing tendency for larger lower cost providers to advertise as if there were no such limitations and you have a recipe for disaster.

Consumer perception is a real issue in the connectivity market and heavy weight marketing by the larger players that's focused on speed and price is often criticised as misleading,” states Darren Farnden, Marketing Manager for communications provider Entanet (www.Enta.net). “If you suggest to consumers that they can have 8Mbps broadband at little or even no cost (in the case of bundled voice and data packages) then that is what they will expect.”

Larger providers typically have economics of scale on their side and the ability to invest in lower cost unbundled (LLU) networking, which is understandably difficult for smaller businesses to achieve. Traditionally, smaller providers have moved to counter this by retaining a more realistic pricing level while offering a higher quality of service.

Simon Davies, a Director for UK ISP IDNet (www.idnet.net), explains: “We view it as an opportunity. Once end users have experienced poor performance and inadequate support from abroad they then come to realise the value of the service level that we provide,” says Davies. “Unfortunately, by then, they are often trapped in a long-term contract. Many of our newer customers are those who are escaping from long contracts with low quality providers. We find that recommendation is the most powerful source of customer acquisition for us

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