Broadband price war looms, but end users unlikely to benefit

Posted on 4 May 2006 at 11:15

The prospect of a price war in the UK broadband market is looming ever closer as more and more big-name players enter the market, but the upshot could be stasis in market's development.

Carphone Warehouse is already offering 'free' broadband with its TalkTalk phone service but can expect to face strong competition from Sky and NTL, fortified by its recent merger with Telewest.

Sky is preparing to launch its broadband (and more) service in June, based on an expansion of the LLU network it acquired with the 2005 purchase of Easynet. It will go head-to-head with TalkTalk.

A price war will inevitably cause casualties among smaller ISPs who already operate with tight margins and will reduce the scope for investment in next-generation technologies. And there is no guarantee that once the market has stabilised, prices will not begin to rise.

As ADSL Guide notes: 'If the price war is just a marketing/land grab affair, then consumers may find in a couple of years that services become more expensive. This is easily done by rejigging the packages, so that more and more customers have to opt for add-ons to meet their growing needs.'

Author: Simon Aughton

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