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By: MarkJ - 4 January, 2011 (8:11 AM)
fluidata uk business ispThe Managing Director (MD) of UK business ISP Fluidata, Piers Daniell, has warned that the growing consumer and business demand for "more data intensive applications" (e.g. internet TV, cloud computing services etc.), combined with an industry culture of reducing prices to the lowest possible level, could lead to higher prices for all over the coming year.

Piers Daniell commented:

"Gone are the days where you could have an ‘all you can eat’ service as most notably, BT, moved to the new charging model. This will now mean people will be paying a lot more for service as demand grows.

Couple that with the reduction in competition, through the high levels of consolidation taking place in 2010, and it looks like data will now become a much more expensive commodity. Especially as these new types of services will be difficult to manage through the use of packet shaping, which the industry has been using to ensure profits can still be made.

A year or so ago we analysed just five users on our network using BT’s popular ADSL MAX service. Together just this handful of users were costing us over £700 per month because of the high levels of data being carried. Now that is fine if you have enough other users not using their full quota, but for a consumer ISP that will soon come to an end."

Daniell thinks that either the industry needs to go back to a "realistic charge for the speed of a pipe with unlimited usage" or see the general public stomach higher costs. However consumers may have little choice but to pay more; data usage is only one of the factors putting pressure on ISPs this year.

Outside of today's obvious VAT hike, ISPs will also face mounting pressure from Ofcom to deliver on their advertised broadband speed / performance promises. They could also face tougher data retention requirements from the revived Interception Modernisation Programme (here).

On top of all that there's also the now notorious Digital Economy Act 2010 (DEA), which is likely to require the largest broadband ISPs in the market to impose costly new systems to help tackle unlawful copyright File Sharing (P2P) activity by customers. A Judicial Review may have been won against the DEA but we still expect the act, at least in part, to come into force.

Suffice to say that 2011, while a good year for building newer superfast broadband networks, will probably not be the kindest to your pocket.
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