'Unlimited Broadband' Fading in Britain?

The high-bandwidth use of new services such as IP television likely spells the end of ISPs' marketing of so-called unlimited broadband

Time is running out for so-called "unlimited broadband" packages, according to analysts and ISPs.

For some time, many ISPs have been offering users what they call unlimited broadband, although it almost always comes with some kind of "fair usage" cap on downloads. PlusNet has been one of the few providers to buck this trend -- preferring instead to offer packages based on fixed download caps -- and is now warning that the emergence of IP television and the BBC's iPlayer will make it impossible for its rivals to continue marketing their packages as "unlimited".

Neil Armstrong, PlusNet's product and marketing director, said: "2008 will be the year of IPTV." Speaking to silicon.com sister site ZDNet.co.uk, Armstrong said the iPlayer service had "gone from zero per cent of [UK traffic] to five per cent in two months", and this explosion in high-bandwidth usage meant ISPs would have to either explicitly charge for the actual amount of data used by customers or operate at a loss.

YouTube is also believed to provide around 10 per cent of all traffic on the internet -- and if it goes "high-quality", as it is expected to do soon, this figure is likely to go up.

Armstrong said: "Where it's going to be a big problem is ISPs selling unlimited broadband with a 'fair-use' policy. [Users on such packages will] hit that figure and [their] line will slow down, and [they] are going to get a nasty surprise. This is happening right now."

Asked whether this meant those who consider themselves to be "light users" of the internet but now use services such as iPlayer will have to pay more, Armstrong agreed. He said: "Somebody somewhere is going to have to pay, which is why we are very clear about what our products [involve]. It's not just a single-price, all-you-can-eat market any more."

Armstrong added that, while business customers "don't fall for advertising as easily" as consumers might, the increasing prevalence of home-working using home broadband connections meant a change in tariffing could affect some businesses.

He also said increasing consolidation in the broadband market, together with the massive increase in data traffic brought about by consumer video services, would force many small ISPs to go business-only or be swallowed up by larger rivals.

Michael Philpott, principal analyst at Ovum, agreed with PlusNet's views on "unlimited broadband". He said: "[Such offers are likely to disappear] quite soon actually -- I would say within 12 months, simply because you hear it more and more. At conferences where the likes of Tiscali and BT are present, you hear them say these things -- 'We must move to a new tariffing scheme' -- and that tells me they're working hard on this."

Before it's here, it's on the Bloomberg Terminal.