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Editor's Blog: The naked truth about DSL
Is it time to rethink broadband pricing?

By Steve Ranger

Published: Thursday 03 July 2008

It might sound like something from the seedier side of the internet - but naked DSL might just be the next big thing in broadband.

It's basically a DSL broadband service - but without a standard phone line and the expensive line rental that goes with it. It's an increasingly attractive option around the world - Australian ISPs began offering it late last year for example, as do companies in the US and Europe.

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But if naked DSL were widely adopted in the UK, the incumbent service providers would lose some revenue, both from those consumers who decide they can do without a landline at all and from those who would migrate to VoIP services over their broadband connection instead, which can work out cheaper.

Combine that danger with the use of mobile outside the home and you can see why telecoms providers haven't exactly been falling over themselves to offer this service in the UK - although throw in fixed mobile convergence and the picture gets even more complicated again.

Understandably VoIP companies - such as Vonage - have been complaining about the lack of naked DSL in the UK for a number of years.

Now of course it's in the interest of companies like Vonage to end the connection between broadband and the landline. But at the same time it's increasingly hard to justify the existence of a separate line rental cost, which for many people is now simply an extra cost if they want broadband.

Telecoms watchdog Ofcom's view on this part of the market - from its statement on the regulation of VoIP from last year - is that industry is best placed to agree requirements for the provision of any such product.

But I wonder how much pent-up - perhaps even unconscious - demand there is for naked DSL. I've certainly heard gripes from consumers who wonder why they have to pay for a landline that they have never even plugged a telephone into.

Inevitably, network investments have to be paid for somehow and the introduction of naked DSL would likely mean prices would go up somewhere else.

But changing the model would make pricing clearer and potentially increase the market for broadband - and therefore internet-based services in general.

Of course there is a chance that wireless adoption will make the whole discussion irrelevant. As the price comes down and coverage improves, wireless will make the landline and wired broadband less attractive options.

It's no surprise that mobile operator 3 has recently been advertising its wireless offering with the tagline 'no need for the fixed line'.

Perhaps if wired broadband providers want to protect themselves against this new threat and keep their customers happy they need to look at their own pricing models - and ditch the line rental for good.

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