TalkTalk, a low-cost ISP in the UK, has asked the government to help encourage consumers to upgrade to newer, higher speed networks. The ISP is hoping that a government-sponsored awareness campaign highlighting the benefits of these networks will motivate consumers to make the switch.
The request is in response to a Frontier Economics study, sponsored by TalkTalk, which demonstrated that even in areas where high-speed fiber networks are widespread, approximately 20% of those who could upgrade still have not done so.
One reason posited for consumers reluctance to upgrade is the hassle of switching providers, which is sometimes required to access a high-speed network. In addition, the increased cost of high-speed connections offering an increase in speed that, for the average consumer, would be imperceptible, also contributes to their hesitation.
Considering the vast amounts ISPs are investing in high-speed networks, consumer reticence to switch is particularly worrisome. According to the Frontier Economics study, high-speed FTTH providers need to capture a 40% market share in a given location in order for the investment to be profitable. But if, for the average UK consumer, 10-12Mbps (the current average internet speed for ADSL in the UK) is sufficient for their basic needs (basic internet browsing, email and some streaming), upgrading to a costlier service, even if it is faster, may not seem worthwhile to them.
This is a situation that is quite similar to the problem currently facing 5G networks: how to get consumers to believe that faster is better, when the network speeds they are currently using appear to suffice. And similar to mobile providers, this is likely to remain one of the major challenges facing high-speed ISPs going forward. Even if they are successful at convincing enough consumers to switch to a high-speed internet connection to make their investment worthwhile, the lower tier connections, at 50, 60 or 70Mbps, are likely to be adequate for most users’ needs. The higher tier connection speeds, at 300, 500 or even 900Mbps, may seem gratuitous to consumers, who, given their most common internet uses, wouldn’t be able to tell the difference.