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EEF Claims UK Manufacturers are Overpaying for Broadband Connectivity

Monday, February 8th, 2016 (8:18 am) - Score 465
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The EEF, which is a trade association that champions manufacturing and engineering in the United Kingdom, has claimed that over a quarter of small firms and half of medium-sized firms are paying “inflated” costs of more than £5,000 a year for broadband Internet connectivity.

Suffice to say that the EEF wants the Government to take an “urgent” look at the situation and has called for another review of business connectivity, with the aim being to encourage competition and thus lower prices.

A related survey (shown as an infographic here) also found that 91% of manufacturers thought “high speed Internet” was as essential as water and 67% said their current Internet connectivity needs were being met (27% disagreed). On the other hand only 50% felt as if their current broadband speeds were “fast enough for their needs“.

The survey of 128 firms also revealed that almost half of companies in business parks were unable to access speeds above 10Mbps (excluding via leased lines of course). However the focus here appears to be more one of cost than service quality.

Lee Hopley, EEF Chief Economist, said (BBC):

While the quality of networks isn’t currently an issue, companies are paying inflated sums to have proper access and are fearful they will not have competitive access five years down the line.”

The EEF’s quoted sum of £5,000+ a year (around £416 per month) usually reflects either a low spec dedicated Leased Line (these can also cost thousands of pounds to install) or equivalent service like EFM (Ethernet First Mile). But simply stating a total cost doesn’t reflect that different businesses will need different levels of connectivity (e.g. a graphic design or media / TV business will often require more than “domestic grade” [ADSL, FTTC] connectivity can deliver).

On the other hand there are a lot of businesses, especially smaller ones, where a leased line would simply be an expensive overkill and yet sadly the affordable alternatives, such as FTTC (VDSL), Cable (DOCSIS) or even native FTTP, might simply not be available. In some cases we have seen entire areas gain access to FTTC and yet a business park in the middle will be left with just ADSL.

BTOpenreach has thus sometimes been accused of deliberately missing out business parks and related estates from their FTTC roll-out so that they can push more lucrative leased lines as the only option, although in fairness we have also seen BT upgrade many such locations with FTTC and so the picture is often more complicated than may first appear.

In the meantime the EEF believes that affordable business broadband could foster a “fourth industrial revolution“, but this will only be possible with change. Ofcom has already done some of this through their 2016 Business Connectivity Market Review (BCMR2016), which proposed a number of changes, including one that would make BT’s national Dark Fibre network more accessible (here).

The regulator has also just announced a new business broadband speed code of practice (here) and will continue to investigate this side of the market. Likewise Ofcom’s on-going Strategic Review could also have an impact upon business connectivity and their existing policy is also helping to bring down the cost of leased lines.

In that sense there’s actually quite a lot of work occurring in this field, although some of the changes will take a long time to filter down and benefit related businesses.

UPDATE 1:31pm

The following is a comment from the UK Internet Service Providers Association (ISPA):

Nicholas Lansman, ISPA Secretary General, said:

“ISPA agrees with the EEF that broadband and digital infrastructure is vital for businesses. Ofcom research shows that 85% of SMEs were happy with their broadband and work is ongoing with Ofcom to ensure business needs are met now and in the future. With hundreds of providers offering business broadband, often as part of a wider suite of services, we urge businesses should to do their homework and get a connection that suits their needs.”

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he is also the founder of ISPreview since 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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4 Responses
  1. If broadband is mission critical to the business, and for many it is, why would you trust it to anything less than a leased line?

    I work with a number of large manufacturers. The bandwidth demands are relatively modest, however it is critical that plants have connectivity. The connection goes down the plant follows.

    Smaller single site manufacturers may be a different story but nonetheless they would require strong reliability where their offices and plant are on the same site.

    Regardless of size connectivity is mission critical for engineering firms.

    I’d like to see more competition within business parks and industrial estates. I know of a couple of firms that would love to deploy hybrid FTTP/B/wireless solutions to them but can’t get at the sites themselves.

  2. TheFacts

    ‘make BT’s national Dark Fibre network more accessible’

    No. It’s providing a dark fibre end-to-end circuit.

  3. FibreFred

    The products are available factor it into your business model

    • A leased line that costs thousands to install and many hundreds per month would simply be overkill / unrealistic for a lot of smaller businesses and in this day should be no excuse for leaving an area stuck on ADSL (unless very rural / isolated and hopefully even that will eventually be resolved).

      Lest we not forget that the early years of a new business often incur a lot of expenditure / debt / risk and may not make much profit, if any. I’ve worked for and run small firms and know the challenges, so simply saying “the products are available factor it into your business model” is a bit narrow in perspective.

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