Ofcom Intervenes on Speed Marketing

IanFogg | June 05, 2008, 10:29 AM

Ofcom is introducing a voluntary code of practice on how ISPs should market broadband speeds.

This is something I have been advocating for some time (see here on the 'ISP prisoner dilemma' where, back in 2006, I advocated regulator intervention to make speed marketing clearer, or here, or more recently here on the issues with VirginMedia's broadband marketing).

There are clear benefits for ISPs as well as consumers with more transparent and comparable descriptions of different broadband services. Consumers will be able to compare services and make a rational decision about whether one ISP, or one package, is worth additional spend. This should help quality ISPs boost broadband revenue per customer, enable ISPs to pull out of the tailspin to the bottom that is current broadband pricing, and through higher revenue per customer support future business cases for fibre network investments.

Ofcom however, has only gone half way. The code is still too focused on communicating the peak, or best, broadband speed a consumer is able to receive on their line, rather than actual broadband speeds supplied by an ISP (depends on number of users and the capacity of the ISP's network).

Already the difference between high theoretical speed and much much lower actual speeds is very marked. The worst examples are VirginMedia's HFC network -- which rates excellently on theoretical peak speed but has some of the most stringent speed throttling policies of any UK ISP -- and the emerging mobile broadband services which offer peak speeds of 7.2Mbps (similar to DSL) but normal usable speeds under 2Mbps (much lower than most DSL ISPs).

The key paragraphs in the statement from Ofcom are these:

20. Different ISPs are likely to vary in their throughput speed performance as a result of a number of factors such as the level of investment in their network capacity. By having more information on ISPs’ respective performance, consumers would be able to make a more informed choice between ISPs and would also have a much clearer idea about what speed they should expect in practice.

21. Ofcom’s aim is to develop a methodology and process which is sufficiently robust to accurately assess ISPs’ average throughput speed performance. To this end, Ofcom is undertaking a research programme to look at this issue in more detail and to assess the role that each of actual and average throughput speed measurements can play. Ofcom will consider revisions to the Code in the light of this research.

So, this is still a work in progress, and in my opinion is unlikely to greatly alter the broadband market now.

However, Ofcom's intervention is a welcome move. Once this additional piece on actual speeds is in place, it will help consumers choose the right broadband service for the right price, and will help the ISP industry to charge more for quality broadband products and increase revenues.