...feeding the fire. At some point the industry is going to want to get more revenue from customers — if they sign up on the basis of being cheap, it becomes very hard to upsell them later."
So, the "race to the bottom" is a risky business. That said, the analysts agree it will probably have the effect of increasing broadband uptake in the UK. This carries several advantages — not least for e-commerce.
"Over the last couple of years, falling broadband prices have already made a big contribution to broadband penetration in the UK, and the further they fall, the greater that effect will be," says Delaney. "And clearly, the more people who have broadband, the more viable both e-business and e-government will become."
This is because broadband provides a "better Internet experience", according to Fogg, who adds that broadband users tend to spend more time online and tend to be more active Internet users.
Adam Legresley, head of operations at the IT Forum Foundation (which works with British e-business and the Department for Trade and Industry), agrees that increased broadband uptake will "make people more at ease and make them more Web literate", especially due to the higher speeds and smoother experience offered.
He suggests this shift will not only bring more customers to UK e-commerce sites, but will encourage more small businesses to go online. "It will give them greater confidence in using the Web as a teaching resource for themselves," Legresley says. "From the point of view of e-commerce, if you're getting more confident using it then you might be more inclined to set up your own Web site, even if you're a micro-business."
Free broadband, therefore, will probably provide an online boost for businesses, but what kind of effect...
Talkback
Broadband is, and almost certainly never will be “free”, the cost is bundled into the charges for other services that have to be taken, often for a long contract and guaranteed minimum spend elsewhere.
With Sky and the others recently, this is the beginning of consumer broadband being an addition to an all inclusive “entertainment package”, bundled with TV, mobile and phone - this is very different to "free".
The future for broadband is very much different between demand and products for businesses and consumers. For consumers, broadband will be a bundled commodity like having a TV or phone line. For businesses, broadband will become a bare minimum for their connectivity, used for simple Internet browsing rather than used to share data, applications and for using VoIP. For these more bandwidth hungry services, businesses are turning to private circuits including leased lines and MPLS.
Conleth McCallan - Datanet