By Kate Bulkley
Monday February 21, 2005
Broadband take-up is rising, but where is the killer content that will encourage us all to join the revolution? Kate Bulkley investigates
Like the cavalry appearing on the brow of the hill, broadband's saviour is expected to arrive in 2005. Just like the internet and digital TV before it, broadband has signed up all the early adopters and is now scanning the horizon for the "killer application" that will bring in the masses.
And again, like its predecessors, the saving grace will not have much to do with technological breakthroughs such as connection speed. That was phase one, but phase two will be about content that is fun to use, that holds the attention of consumers and creates a whole new experience beyond bragging about bandwidth and speed.
Already take-up figures are rising more quickly, with more than a third of the 16 million UK internet users surfing on broadband, always-on connections by the end of last year, according to Ofcom. Much of this is due to falling broadband prices, with monthly subscriptions now below the benchmark £20.
"Broadband is growing a lot faster than normal dial-up internet access," says Andreas Gutjahr, marketing manager at Nielsen//NetRatings. "Prices are coming down, so broadband internet is becoming part of everyday life. Music downloading is hot and VoIP [voice over internet protocol, or internet telephony] is very hot. The next big thing is more people spending more time online."
So the stage is set for the next big push, say industry executives. The number of broadband users is growing, which means that the new delivery platform is all the more interesting for content owners. The next 12 months will be the key, says Andrew Burke, CEO of BT Entertainment, a new broadband education and entertainment division formed last year to develop, license and deliver content such as on-demand music, gaming, TV and movies.
"Broadband is getting bigger and bigger for us. As bandwidth increases, it becomes much more video-ready as a medium," says Burke. "The ability to deliver niche content to particular communities is becoming a reality."
BT is already testing a higher compression rate for broadband, called MPEG4, so it can deliver more content of higher quality. And as part of its new entertainment push, the president of Universal Studios Networks UK, Dan Marks, joined BT this month to guide its video-on-demand over broadband strategy.
Early broadband adopters wanted fast, always-on connections, but recent broadband subscribers want something more as well. "This year is about taking community, communications and entertainment and putting them together," says Burke.
A prime example of Burke's broadband vision is a new site launched by the Philharmonia orchestra. For its 60th anniversary in January, the orchestra relaunched its own website and unveiled the Sound Exchange, a companion site with a revolutionary view on new ways of interacting with audiences.
Five years in development and part-paid for by BT, the Sound Exchange (www.philharmonia.co.uk/thesoundexchange) offers musical education in chatrooms and question-and-answer sessions with the musicians, plus video demonstrations by the orchestra. Users can submit their own compositions and choose from thousands of free music downloads. The site will also host live, interactive concert webcasts; the first has been scheduled for April 23.
"This is exciting because we are offering a rich media experience inside a webcast, which is something that artists like Robbie Williams have done, but hasn't ever been done for classical music," says Alice Walton, the Philharmonia's media and marketing director.
Helping to create such innovative sites works for BT on a number of levels: BT's broadband technology unit, BT Rich Media, acts as the tech nical platform while all broadband providers, including BT, hope that this kind of innovative, community-focused content will increase their subscriptions. Even though the Sound Exchange is available on the internet and is free to any user, many broadband experts see this site as a huge step forward for a technology that already boasts nearly 22% penetration in UK households.
"The audience is getting much more spread across all ages and demographics" says Burke. "It used to be young, internet guys on their PCs, but it isn't now."
Music has driven the internet in the past and is now doing the same for broadband. iTunes and Napster have contributed to broadband's popularity, because the high-speed connections make download speeds around 10 times faster than dial-up. In December, online single downloads in the UK exceeded physical sales in stores for the first time.
But downloading tracks and sites like the Sound Exchange are not enough to take broadband to the next level. The ISPs are waiting for better content, while the content-makers are biding their time while subscriber numbers improve. Neither side seems to want to take too much of a risk before the other has reached the promised land. However, earlier this month, AOL Broadband started selling its services in 1,100 high street stores owned by the Dixons Group. Meanwhile, its own in-house content library - including films and cartoons from Warner Bros - is predicted to be available on AOL Broadband later this year.
"It's a vision thing," says Burke. "There is so much going on in the content area not just by us but by everyone, which is why by the end of this year we will be worrying not about bandwidth but about content propositions."
But all this pushing of broadband is not just about content, it's about communication. Revenues from landline telephone calls are falling sharply, eroded by mobile calling, price competition and new technologies such as internet calling using VoIP. Telecom research group IDC said this month that European landline revenues will decline by $13bn over the next five years. So for BT and other telecommunications companies with a big investment in landline systems, embracing the broadband revolution is not an option - it's a necessary part of their future.