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RSS feedsWhile few doubt that broadband will have a positive long-term effect on the UK economy, the impact it has had on business today is debatable.
This appears to be, in part, because adoption is still limited, even though the technology has been around for some time and is now available in 85 per cent of homes and businesses, with 100 per cent coverage due by the end of next year.
Despite this, only 18 per cent of UK-based companies and organisations use some form of fast connection, according to Ovum analyst Michael Philpott. His definition of fast links include DSL offerings, cable modems, ISDN, leased lines or data network services.
Even so, some 40,000 new, mainly DSL, links are being added each week. Philpott believes this means that by 2008, coverage is expected to have hit a more impressive 77 per cent.
Unsurprisingly, adoption has been highest among large companies with expensive, but secure and reliable, leased lines or frame relay technology.
Some are starting to switch to DSL offerings, because they are generally between 40 and 50 per cent cheaper, although less robust and less likely to come with appropriate service level agreements.
Typical replacement scenarios include hooking up branches to head office, employing virtual teams and enabling more than just key employees to work from home or to hot-desk.
Interest in broadband is also increasing among medium-sized organisations at which newer DSL technology is mainly targeted, but there is still "a long way to go for smaller businesses", said Philpott.
Mid-market use is still at a relatively early stage, and as yet is being deployed mainly to boost internal efficiency.
Caroline Bryan, managing analyst at Datamonitor, said: "So far, most of the focus has been on higher bandwidth, with people simply using broadband as a faster pipe.
"Now, however, new applications are starting to be developed to take advantage of the extra bandwidth, especially on the customer relationship side."
The move will become more marked over the course of 2004, and will lead to the addition of more web interfaces to mid-market customer relationship management applications so they can be accessed more easily using internet browsers, according to Bryan. More packages will also become available to allow users to prioritise customer queries.
The third stage of adoption will see broadband-based applications built to deal with external partners and suppliers, although this is unlikely to happen to any great extent for another couple of years, said Bryan.
In the same vein, she does not expect the increasing adoption of broadband to result in a rash of start-ups or an e-commerce recovery, although she does anticipate that it will contribute to the latter in the long term.
"It's just a connectivity mechanism and provides a faster way to communicate," said Bryan. "It doesn't bring any fundamental changes to the way normal companies do business. It can enhance the business, but it won't revolutionise it."
Clive Longbottom, service director at analyst Quocirca, suggested that broadband is not a pre-requisite to undertaking e-commerce, although it does make it easier and more efficient in the sense that organisations can perform functions such as data back-up more quickly.
It also allows them to host their own transactional websites rather than have to rely on third parties that have faster bandwidth available to them.
"Broadband is helping business models to evolve, but it's not bringing about any huge revolution, especially in large organisations," said Longbottom.
"It simply allows them to say yes to more things like flexible working, so I don't think there'll be any radical changes taking place over the next few years."
Nevertheless, the UK government has put a lot of effort into pushing broadband adoption on a national level, with the aim of ensuring that the country remains on the top rungs of the worldwide economic ladder by retaining its competitiveness in increasingly challenging global markets.
The impetus behind its enthusiasm is the well proven link between socio-economic development and technology infrastructure provision in the shape of telephony, PCs and the internet.
Another driver is the fact that faster bandwidth can act as a great leveller. "A lot of small businesses are saying that broadband allows them to do things that previously only bigger companies could, and in an affordable way," said Philpott.
Such statements are backed up by research published last year by the Centre for Economic and Business Research on behalf of the Broadband Industry Group.
The study indicated that if all UK firms had broadband, productivity would rise by 2.5 per cent within 11 years, leading to an increase in GDP of £22bn by 2015 and a fall in government borrowing of £13bn as a result of lower spending and higher tax revenues.
Also, as the economy became more productive, net exports would grow by £11bn and fixed investment would rise by £8bn because of higher expenditure on telecoms equipment and the increased availability of online services.
Such services are expected to include voice-over-IP being layered over broadband and offered as a package for internal communications purposes, while videoconferencing, which is today mainly of poor quality, should improve as all parties involved use faster connections.
Application service provider offerings should also start appearing in higher volumes, while providing a greater breadth and depth of functionality.
But, as Longbottom said, for broadband to make a difference to any business, they simply have to identify the individual opportunities that it presents for them: there is no one-size-fits-all approach.
"You have to grab opportunities with both hands and use them to thrust the business forward," he said. "Broadband is only another tool in the toolbox and won't do anything in and of itself. It's still the business that drives the business. Broadband will just make it more possible to be successful."
CASE STUDY: Neutralize
"I consider broadband to be more of an evolution than an revolution, but we couldn't do business without it now. There's no going back," explained Lucy Cokes, managing director of online marketing agency Neutralize.
The Redruth-based business, which employs eight people, replaced its ISDN connection with an ADSL broadband link supplied by the Cornwall Actnow initiative in May 2002.
Actnow is a public-private partnership, which includes Cornwall Enterprise, Cornwall County Council and BT. It provides SMEs with a range of subsidised broadband packages, with the aim of encouraging adoption to boost the local economy.
"We pretty much do everything over the internet, but we've halved our costs and can do things at twice the speed," said Cokes.
"When we had ISDN, we were paying for each call that we made, which was costly, so signing up for broadband wasn't really something we had to think about."
The organisation is also able to take on much larger projects than previously. One of its major revenue earners is providing customers with pay-per-click online search engine campaigns, which often involve managing tens of thousands of key phrases.
"We couldn't manage large campaigns with our old internet connection. Because of the huge amount of information we need to handle, the pages would time out before the process was complete," said Cokes.
"This meant we could only manage campaigns that were worth about £5,000 per month, but now some of our clients are spending as much as £30,000."
The faster connection also means that Neutralize can produce a number of performance reports in parallel over the course of two to three hours, as opposed to one every eight hours.
This has increased productivity tenfold, and made the process less labour intensive because staff no longer need to keep checking that the reports are still running.
See also:
Those without broadband can't download massive updates, and that affects us all 22 Jul 2004
Bandwidth of 4Mbps downstream and 400Kbps upstream - but only in central London 07 Jul 2004
Cheaper than a leased line and ISDN, broadband connections provide the opportunity for all companies to benefit from high-speed internet connectivity. 01 Jun 2004All Voice & Data
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