[8]
UK: Internet Diffusion
Overview of UK Internet Diffusion:
The UK has almost half their population on the Internet. Most
are professionals who own their own homes. So there is a digital divide
in the UK of people who have access to the Internet. One of the problems
with access to the Internet is the ISPs are relatively expensive. This
is because of the VAT on the telecommunication fees that are normally paid
by the ISPs. Yet this has not stopped international firms connecting
the UK to the Internet. There are many telecom firms that want to”
cross the pond” to connect to the UK.
According to the UK’s National Statistics, 45% of the adult population
in general uses the Internet. By profession, there are far more professionals
using the Internet vs. non-office workers. As shown in the table below,
66% of professionals use the Internet while only 20% of unskilled are Internet
users.
Adults who have used the Internet by social class of Household Reference Person
Social Class July 2000 Percent
All adults 45
Professional
66
Intermediate
58
Skilled non manual
46
Skilled manual
31
Partly Skilled
26
Unskilled
20 [1]
Another interesting statistic is that of the respondents in the July 2000 study of Internet access ,70% accessed it from their homes, while only 26% from Universities, as seen in the table below. This is a change from the beginnings of the Internet when most users accessed it from Universities.
Locations adults have used to access the Internet (for personal use)
Place used to access the Internet July 2000 Percent
Respondent’s own home 70
Another person’s home 33
Respondent’s workplace 32
A school, college, university or
other educational institution
26
A public library 7
An Internet cafe or shop 6
A community or voluntary organization 1
A government office 1
Somewhere else
3
Note: percentage may not add to 100 per cent as respondents may
give more than one answer[2]
As in many other industrialized nations there is a “digital divide” by income in internet access in the UK. The highest amount of access is in the top 3 income percentiles. The lowest amount of access is the lower 3 percentiles of income as shown in the table below.
Households with home access to the Internet,
UK by gross income decile group: 1998-99
% 1999-2000 %
Lowest ten per cent
3
6
Second decile group
1
3
Third decile group
2
4
Fourth decile group
3
6
Fifth decile group
4
15
Sixth decile group
7
15
Seventh decile group
10
22
Eighth decile group
16
28
Ninth decile group
19
38
Highest ten per cent
32
48
All households 10 19[3]
These statistics show that the UK has a “digtal divide” between
people of higher income and lower income and between home owners and renters.
The largest group of users are in the highst ten percent of household incomes.
Also 70% of the users of the Internet own their own home. Finally, only
a small proportion access from the public library. So these tables show
that there is a divide between the classes in who has access to the Internet.
UK’s Internet Traffic:
The UK has the second largest international Internet bandwidth of 18,
338 MBPS as compared the US, which has the largest international bandwidth
of 28, 308 MBPS.[4] The reason for such a large
bandwidth is that the UK user has many different types of Internet connection
services to choose from. They have everything from dial-up modem to DSL.
They also have cable modems for consumers and TI lines for businesses.
They have a rather advanced telecommunication infrastructure.
The UK has one of the fastest bandwidths in the world. Yet it does
not have as large of an Internet host rate as the US. The UK had only 63.1
Internet host per 1,000 access lines in 1999. Whereas the US had 247.4
Internet hosts per 1,000 access lines, as shown in the table below.
OECD’s: Internet hosts per 1,000 access lines
September 1998 September 1999
UK 45.1 63.1
US
146.3
247.4
New Zealand
105.2
129.2
France
14.5
22.9 [5]
Even though the UK has a lower then expected rate of hosting internet sites they have a great many web sites registered in their TLDs domain. The UK has approximately 895, 369 TLDs sites as compared to the US which has 7,465,358. It also has a greater amount of web sites than New Zealand and France, as seen in the table below.
Webs Sites in the (selected OECD Areas):
Weighted by gTLDS probable physical location or network
UK 895,369
US 7,465,358
New Zealand 31,183
France
67,158 [6]
Types of International Internet Connections:
For the most part the UK uses a mixture of satellite and coaxial submarine
cable for international connections. The submarine cables between the US
and UK and the UK and Europe have become increasing crowded with more international
firms wanting run cable across the “pond.” Fiber optic submarine cable
has become an increasingly popular choice for moving information internationally
for the UK. There is now race for major world wide telecom firms to lay
fiber optic cable across the Atlantic as well as the Channel.[7]
For Consumers:
ISPs for consumers will charge anywhere from nothing to about £18.00
a month . This is over and above the local telephone fees if they have
a dial-up service. These rates are shown in the chart below.
ISP charges are also over cable fees if the consumer has a cable modem. Below is a chart from OFTEL the shows what each ISP charges the British consumer for an ISP.
UK ISP charges
ISP
Scheme
Monthly Charge
Telephone Access Charge
Subscription free ISPs:
Freeserve, CurrantBun,
Breathenet, LineOne,
No subscription fee
Local rate, see below for Freeserve
discount offer
BTClickFree,
VirginNet, MSN,
Netscape Online, etc
Compuserve Subscription
Plan Standard £6.50 / month, includes
5 hours;
Local rate
£1.95 / hour thereafter
Flat Rate Pricing
£17.95 / month
Local rate
AOL
Unlimited Usage
£9.99/month or £99.99/year
1ppm (since October 1999)
Light User
£4.95/ month
Local rate
(including 3 free hours per month - additional hours
charged at £2.35
TV Internet
£5 / month
Local rate
Cable Modems
£40 / month (plus cost of cable modem £149.99)
None
Cable Internet (Telewest)
£9.98/month for single line
Local rate
Telewest customers, free for
Telewest customers with more
than one line (second line
£3.93/month), £11.74/month for
non-Telewest customers
Cable and Wireless
Cable and Wireless Lite No subscription fee
Local rate, CWC subscribers receive
5.9% discount on CWC evening local
rates & 6.3% discount at weekends
Cable and Wireless Internet £10/month
Local rate, CWC subscribers receive
5.9% discount on CWC local rates in
evening & 6.3% discount at weekends
Connect 12
5.99/month
12 hours of Internet use at evenings &
weekend. (Allowance is used up 3
times faster during peak times). After
allowance has been used up calls cost
2.4ppm day, 0.8ppm all other times.
Connect 35
14.99/month
35 hours of Internet use at evenings &
weekend. (Allowance is used up 3
times faster during peak times). After
allowance has been used up calls cost
2.1ppm day, 0.7ppm all other times.
Connect 75
29.99/month
75 hours of Internet use at evenings &
weekend. (Allowance is used up 3
times faster during peak times). After
allowance has been used up calls cost
1.8 ppm day, 0.6ppm all other times.
ClaraNet
FreeTime 12
£5.99
12 hours of Internet call time at evening
or weekends (allowance is used up 3.8
times faster during peak times). After
expiry rates are 20% below BT local
rates
FreeTime 35
£14.99
35 hours of Internet call time at evening
or weekends (allowance is used up 3.8
times faster during peak times). After
expiry rates are 20% below BT local
rates
FreeTime 80 £29.99
80 hours of Internet call time at evening
or weekends (free allowance is used up
3.8 times faster during peak times) after
expiry rates are 20% below BT local
rates
FreeTime Weekend £11.99
Free calls at weekends, 20% off BT
standard rates at other times
BT Internet
Plan Unlimited £11.75 per month, or £129.25
per Local call rate weekdays & evenings.
annum
Free at weekends
Plan 180
£4.70 per month for 3 hours access
Local call rate
to BT Internet, with additional
hours charged at £2.35
Highway
gives connection speeds of up to
Local call rate per ISDN channel used
128Kbps. It is available for £11.75
monthly, or an annual charge of
£129.25
Screaming.net
No subscription fee
Local call rate. Free at weekends and
evenings for LocalTel telephone
subscribers
Demon
£11.75 per month.
Local call rate
F9 Premier £9.99 per month
Local call rate weekdays & evenings.
Free at weekends
Also starting in 1999, many consumer were able to start choosing
to use DSL and telcoms are starting implement them. In general, this is
helping to increase the number of ISPs in the UK which is now at about
300.[10] The UK government would like to
see more ISPs in the hopes that this will bring down Internet access prices
as well as increase the available of the Internet.
The ISPs rates for business differ as to how firm’s access the Internet. If they are still dial –up or are very small, pricing is the same as to consumers. But the pricing is different and much more complex for larger companies that do not use dial –up or DSL for a connection. If they us T-1s or fiber optic connections the cost for the ISP will be different because the physical communication parts are much more expensive. Also OFTEL has strict guidelines for the design of private telephone networks. They include leased line as well as fiber optic lines. They are many companies from the abroad including the US who are creating private networks. According to the California Trade and Commerce Agency, revenues generated by connection and rental charges of lease lines for the UK were estimated to be worth around $1.9 billion in1997/1998 (BT accounts for 88%of this figure). The majority of leased lines in the UK are digital and account for around $1.5 billion of leased line revenue. The rest of the UK’s leased lines are provided through analogue circuits that account for $400 million of total leased line revenues.[11]
The UK is trying to lower broadband prices. One area that OFTEL is concentrating on for business as well as residential is DSL exposures as well as prices. The latest study from OFTEL puts prices of DSl for business and residential ranging £35.00 to £700.00 per month for a subscriptions of DSl for business, as indicated in exhibit A3.
UK and ISP Charges:
One of Prime Minster Tony Blair’s incentives is to lower the
price of broadband Internet access for all types of services. In other
countries there are many more choices for DSL than in the UK and to lower
prices for service than in the UK. For example, the UK still has a 17.5%
VAT on telecommunication services while as in the US the tax is between
0% to 10%.
VAT and sales tax
Rates [Source:
Analysys, 2000]
Country
Value added, sales or utility
taxes
France
20.6%
Germany
16%
UK
17.5%
USA – New York
8.25%
USA – San Francisco
7.5% [13]
Also the major telecoms in the UK are still charging per minute for
Internet dial –up services, although BT is adding special numbers just
for dial-up services so that they do not charge per minute. Until the VAT
stops most the ISPs in the UK are picking up those charges making it hard
to be profitable and be a free ISP. These two conflicting issues have made
it difficult for ISPs to keep the charges down. It also has encumbered
the spread of broadband Internet access.[14]
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This report was completed in December 2000 for the class Impacts of National Information Technology Environments on Business given by Prof. Carmel in the program of Management Of Global Information Technology at the Kogod School of Business at American University in Washington D.C.
