But this broadband growth has caused a deep flaw in the market. Broadband providers knew that it was going to be very difficult to attract customers once they have signed up with a rival provider. So providers have been at all out war with each other to attract broadband adaptors while they are up for grabs. The war is being fought on two fronts. A price front and a technological front.



The war being fought on the price front simply involved providers having to constantly under cut each other. From £25 per month, to £20 to £15. Then it was £9.99, which was an amazing price front. Now, the price that we all expect is free. Yes, providers are giving broadband away for free. Of course, this means that you have to sign up to a bundle with at least one other, non-free, product. But we all use those products anyway, so there is not any extra cost.

The technological front involved providers having to offer ever-increasing speeds to stay ahead of their competitors. When broadband first came out, it was at a speed of 512kb, which was ten times faster than we were used to on dialup. Now you can reach speeds of 24Mb, some 480 times faster than a dial up connection. This need for speed does not come for free. Providers have had to invest in their own network with the very latest in technological advances.

So to succeed in the broadband market, providers have had to spend millions in technology and drop the price down to zero. Broadband is now nothing more than a loss leader. A product that is used to attract customers to another product that that company offers. But those other products, mainly home phone and digital TV, are also highly competitive. The intense pressure on providers to survive has lead to consolidations with bigger providers swallowing up smaller ones.

But where is the future heading? Well, the simple answer is even more consolidation. But not only will the bigger providers swallow up the smaller ones. The bigger providers are the ones that face the most pressure, with high overheads and angry shareholders. Bigger providers will start to absorb each other. This trend has already begun with two of the broadband powerhouses, AOL and Tiscali, putting their UK's operations up for sale. Only the strongest of the strong will survive. This will lead to less competition and therefore less choice in the long run. But then how much choice do we actually need. The market is likely to become more like the mobile market, which only has 6 main networks. Competition is still rife amongst those 6, so as consumers, we will still be able to demand the world from broadband providers.