if connected

The Globalisation Institute, or the self-proclaimed “Brussels’ most popular think tank website”, thinks so as they own www.globalisation.eu (interesting arguments about PCs and Windows here too, which is how I came by this site).

But, foolishly, they’ve not secured the z word for their website: www.globalization.eu. This is very insular thinking, how could anyone possibly think of globalisation without an ‘s’?

It’s even more fun at the dot com level:
www.globalisation.com is a different EU-orientated site.
www.globalization.com does not exist, so much for American global spelling.

Which of these phrases would be the better way to announce to Skype’s users that the company had fixed the Skype network:
“Take a deep breath. Skype is back to normal.“
“Skype is back to normal. The whole world can talk again.“
The former are the words that Skype used and incorporates the current Skype tagline. The latter is mine, and is based on the one Skype used from 2004 until January 2007.
When are deep breaths required for normality? Don’t think too hard about this, the answer is not always pleasant.
Skype needs to fix its message, as well as the network.

European ISPs are stretching the usage of words such as “free” or “unlimited” or “up to 8Mbps” in their marketing to gain (a brief period of) competitive advantage to acquire new customers.

Even this temporary advantage will only be realised if that ISP’s competitors don’t immediately adopt the same tactics. But market pressure will force them to do precisely that. This is an industry issue; it is not the fault of any particular ISP player.

For consumers to be able to choose between different services — on the basis of either price, the value of bundles, or high speed or better quality for additional cost — they need fair service descriptions. Consumers need market transparency.

Otherwise, ISPs that employ a clear, literal and conventional usage of words such as “unlimited” will find consumers picking similar sounding, but inferior, rival broadband services at a lower price. This will accelerate downward pressure in broadband pricing, which no ISP wants. It will also reduce consumer choice as ISPs will have little incentive to offer high quality broadband services.

This is the classic prisoners’ dilemma (also see here for more explanation). For the ISPs to escape the prison of their current marketing approaches they must work together. If just one major ISP breaks ranks, they will all have to follow to remain competitive.

There is another way. A country’s ISP association, or regulator or advertising standards body could intervene to enforce minimum standards that would benefit all ISPs as well as consumers. But for this to happen quickly and effectively, the industry must want central co-ordination to happen. These kinds of conversations are already taking place, but not yet to this extent.

The goal should be that ahead of the launch of new broadband services, the ISPs explain the new offerings to the regulator or advertising body, and agree the ground rules for marketing. The rules must be in place in advance of the product’s availability. At the moment, such rules are lagging market innovation, which is hurting the efficient operation of the broadband market and damaging ISPs’ revenues.
Read more:
- JupiterResearch’s European Broadband Forecast which includes a broadband access revenue forecast.
- A related blog entry of mine: The Mis-selling of Up to 8Mbps Broadband.
- Or, my US colleague’s view of actual vs marketed US broadband speeds.

[update 6.02pm 27/7] This isn’t intended to be an attack on BT Wholesale. The issue here is about clarity and transparency in marketing broadband and is one *everyone* in the industry needs to tackle. More tomorrow.

Back in March BT Wholesale launched the line max services that offer speeds theoretically up to 8Mbps. Today, in the BT results BT Wholesale argue this has been successful and a stable product, I think the industry would beg to disagree.

BT Wholesale launched broadband max services in March 2006, providing the UK market with the highest stable speed broadband service across the widest national footprint in the world. Service providers are currently migrating broadband subscribers to BT Wholesale’s IPMax services, which deliver services at speeds of up to 8 Mbit/s. To date, more than 750,000 subscribers have been migrated to max services, aided by the availability of a new automated mass customer migration tool.

The vast majority of DSL broadband connections in the UK are based on BT Wholesale packages. If this wholesale product has issues it affects almost every ISP in the industry. Several ISPs are offering free re-grades back to the old flat rate broadband products, and one of the leading forums for savvy broadband users reports multiple problems with line max that are continuing.

BT Wholesale advised that the reasons a consumer might not be able to receive that speed was due to telephone line quality issues, ie a technical limitation of ADSL1 that is, correctly, outside of BT’s control.
In reality, speeds are being limited by other factors (as well) such as exchange congestion. Plus, BT have set their systems to include some apparently rather arbitrary speed throttling settings, which are intended to improve reliability but appear to create a lowest common denominator for download speeds and have caused a lot of teething problems.

The problems for the industry as I see them from this are:

1. Advertising standards issues with the 8Mbps claim. An actual 8Mbps download speed is impossible to achieve on ADSL1, so these products should not be advertised as ‘up to 8Mbps’. The fastest actual download speed is around 7.1Mbps.

2. Misrepresentation of the reasons why the maximum speed may not be achieved. An end users’ speed is not determined solely by the quality of their line at the moment. Yet, that is what most ISPs selling these services imply, see: Demon, Nildram, Pipex, Plusnet, Orange, etc.

Actual speeds appear related to congestion and internal BT network settings. While previous products were sold as “contended” with a stated 50:1 or 20:1 ratio of users to capacity. That has been dropped from the product description now. In practice, contention issues appear very common now, while they were rare before.
Additionally, those ISPs that use traffic shaping, or prioritization, on their own network may reduce usable speeds for consumers. For those ISPs, blaming the quality of a customer telephone line is a convenient decoy. This reduces transparency in the market.

3. The above will create further downward price pressure on the broadband market (see our forecast for broadband ARPU). If consumers think their line is the reason they cannot get higher speeds, which I suspect most consumers will think (as few will know to check their router sync speed and compare it with the actual download speed), then they are extremely unlikely to think it’s a good idea to switch to a more expensive ISP offering faster speeds. It makes it hard for an ISP focused at the quality end of the market to justify why a consumer should pay more for broadband; this puts further pressure on broadband prices which is not in the industry’s interests (as a whole).

4. Poor performance of BT Wholesale-based DSL will increase market concentration around the largest ISPs, reducing consumer choice between providers. If the BT Wholesale-based packages have too many problems it increases the need for ISPs to invest in LLU networks to be competitive. But that requires significant economies of scale to be worthwhile. Medium-sized and small ISPs will find it harder and harder to remain viable; unless the LLU players start offering a compelling wholesale service to compete with BT.

5. BT Wholesale will likely use the line max teething problems to justify their late ADSL2+ launch timescales. In today’s announcement, BT reiterated that the DSL2+ max products (up to 24Mbps) would be tied to the 21CN roll out and therefore start in January 2008. Be (Telefonica-owned) launched DSL2+ a year ago in the UK. The hidden jewel in Sky’s announcement last week was the mass market launch of its DSL2+ at up to 16Mbps for just 10UKP a month extra for existing Sky TV customers. This will increase the benefit to ISPs of using an LLU network, rather than BT’s. Elsewhere in Europe, ADSL2+ services similarly launched years ago.

Carphone Warehouse UK today launched a new bundled offer, which they are marketing under the headline of Free Broadband, Forever.
The initial press coverage is reporting a “Broadband Price War” and is quite breathless. This is a major marketing success for Carphone, especially as free is not really free in this case, and the war is not starting it’s been ongoing for the last eighteen months at least. This news is, instead, a major conflict escalation which will force the other major ISPs — especially those leading with value-centric propositions — to respond.

For a monthly fee of £9.99, TalkTalk customers will receive:
- Unlimited local and national landline calls, 24 hours a day.
- Unlimited international landline calls to 28 countries, 24 hours a day.
- Up to 8 Mbps broadband access.
This offer is available from today to all customers in all 1,000 exchange areas, covering nearly 70% of the UK population. If the local exchange has not yet been unbundled, the customer will initially be connected via BT’s wholesale IP Stream service, and then migrated at a later date at no extra cost to them. The first customers will go live from the beginning of July 2006.
In addition to the monthly fee, all customers will pay the standard monthly line rental charge of £11.00.

A combined monthly subscription price of £21 a month will be less attractive to the remaining dial-up customers than Carphone hopes: 33 percent of European dial-up users said they were unwilling to pay more to their ISP even when offered the choice of cheap bundled telephony or much faster speeds. About half of the dial-up access revenues in the UK are from unmetered dial-up users. These users must be adverse to subscription packages given their long standing rejection of both unmetered dial-up and flat rate broadband products over the last six or seven years during which they have been widely available.
It’s the marketing that makes this broadband product free, not the actual package detail. Other providers in Europe offer a no-monthly subscription broadband products that are instead pay per use. In the UK, Bulldog’s prices start at £10.50 for phone plus DSL on a pay per use basis. The cable companies, like Bulldog and Tiscali, have long offered telephony/broadband bundles in the UK. Sky subsidiary UK Online, has an entry level product priced at just £9.99, with a similar geographical limitation but without the need to switch phone package at the same time. This Carphone product is cheap, but it’s evolutionary not revolutionary.
What this package will do, is provide a natural way for Carphone to up sell their existing base of 2.6 million residential voice customers, many of whom will have an existing broadband package from another ISP. This threatens to raise churn levels in the broadband market.
Carphone’s broadband customer base of 75,000, makes it a small ISP today (and not the number three broadband ISP that the FT reports as of 1pm UK time on the 11th, until they fix it), behind Tiscali, Wanadoo, AOL, BT, ntl/Telewest, Pipex and a number of others. Those providers that have expensive or non-existent telephony packages will respond with their own product announcements over the next few weeks to counter Carphone’s successful press activity.
The devil is in the detail, and the reality is not as revolutionary as Carphone Warehouse is presenting. Customers must commit to an eighteen month contract; the trend in the UK is to shorter, often monthly, contracts although with some ISPs retaining 12 month contract lengths. Carphone’s broadband product has a usage limit of 40Gig a month. The product will not go live until July 1st, by which time Carphone’s competitors will have responded. Once customers have been migrated onto an LLU package as Carphone plans, the logistics of LLU will make it slow and painful to migrate elsewhere later, in addition to the £70 cancellation charge. Carphone have a set-up fee of £29.99 a month; many ISPs offer free installation.
Bottom line – this is more of a telephony play than it is a broadband initiative. This is not the start of a broadband or telephony price war, but an escalation of the existing war. There will be more innovative launches to come this year in the UK, and elsewhere in Europe.
Advice for clients:
- Read this: Dial-up’s Lingering Death – Will Narrowband Laggards Ever Spend More with Their ISPs? which contains the consumer survey data I quoted above, plus more on dial-up users interests, and has actionable advice for ISPs.
- Clients should also send any specific questions not addressed in our published reports, and we’ll set up conference calls or respond in writing, as appropriate.

Eric Peterson is right, advertisers should be careful about using cookie functionality in Flash adverts (to overcome cookie blocking) and of using other Flash tricks that make Flash adverts annoying to consumers.
For select groups of consumers that use Firefox, easy on/off switches for Flash already exist, see: Flashblock and Flash click to view.
Poor and annoying usage of Flash will persuade more consumers to use these kinds of blocking tools. More importantly, such usage will raise the probability that mainstream vendors — like Symantec, Mcafee, or Microsoft — incorporate similar tools into their security products which will likely impact the current installed base of Flash player software. Alternatively, as Eric mentions, Macromedia may simply remove that ability from Flash, which will guarantee that future Flash installations will be free of the problem.
I imagine there may be short term gains for advertisers in some cases of using such tricks, but the harm long term could be much greater, and what is the immediate effect for advertisers’ brands of deploying intrusive adverts?
I must ask the advertising and marketing team here (I am, after all the European Platforms & Access analyst!).

“iPod Shuffle: Smaller than a pack of gum and much more fun.(2)”

Has the footnote:

“(2) Do not chew iPod shuffle.”

See: Apple (UK and Ireland) – iPod shuffle.
Only a US company would bother to make such a statement in the less legally frenzied UK. But, when Apple launches a set of colour iPod Shuffles, like Apple has previously with iMacs and mini iPods…