When BT left tenants in south Liverpool out of the broadband revolution, their landlord decided to challenge the telecoms giant at its own game.
BT Broadband is no stranger to competition. But there's something unusual about the upstart rival threatening to steal its business in the Speke and Garston area of south Liverpool – it is owned and run by a housing association.

South Liverpool Housing's new business venture, Your Broadband, will provide internet access and TV-based digital services for tenants, residents and businesses in Speke and Garston from the spring. Owned by a subsidiary of the post-transfer association, it will compete head-to-head with BT Broadband, claiming to have higher technical specification and lower costs.

"Compete" is the operative word. Although, as a registered social landlord, SLH is concerned with the regeneration potential that improved communications can bring, Your Broadband's creators want it to succeed as a hard-nosed commercial proposition. Robbie Davison, SLH's assistant director for new initiatives, is responsible for Your Broadband and "isn't a big believer in social enterprise". The term suggests businesses that rely on community spirit, he says, whereas Your Broadband has to succeed in the marketplace.

"People should only spend the money where they're getting the best service," says Davison. "If we can't compete with the big boys, we shouldn't be in the game."

Your Broadband started life 12 months ago, when South Liverpool Housing realised IT could promote community regeneration by providing easier access to information, services, job opportunities and training. Broadband – which can pump digital video programming as well as offering fast, unmetered internet connections – appeared fundamental to this vision.

But SLH quickly ran into a massive problem: broadband services, which transmit data much faster than dial-up internet, need a special cable network but BT had not upgraded Speke and Garston's three local telephone exchanges and had no plans to do so. In fact, BT's policy was only to "enable" exchanges where there were enough PC owners to stimulate demand. Speke and Garston didn't make the cut.

However, BT did not have a monopoly over the wire running from BT telephone exchanges to homes and businesses. In 2000, the telecoms regulator forced BT to allow independent telecoms operators to access BT's exchanges to install broadband upgrade equipment. South Liverpool Housing took advantage of this and began to install its own infrastructure (see "The science bit", below).

With PCs prohibitively expensive for many of its tenants, South Liverpool Housing chose to offer its domestic service through not only PCs but also TV sets. When it goes live at the end of next month Your Broadband's TV set-top boxes will provide email and internet access, including a special website for requesting repairs, community information, or booking an appointment at the health centre. An interactive TV service, Your TV, will offer local programmes including video walkthroughs for vacant SLH properties, local news and sports fixtures.

So far, the set-up costs have run to £1.5m, which has been split roughly 50:50 between SLH's own money and grant funding from public sector sources including the Housing Corporation and the North-west Development Association. There are already 60 subscribers, paying £15 a month for the set-top service or £22 for PC-based access. In the first 18 months after the service goes live, Davison hopes to sign up about 1000 more.

It's good to talk business
But domestic subscriptions alone will not fund a sustainable service. To work, the venture needs to sell broadband to business – and this market will be the stage for the fiercest competition. Local businesses can choose between Your Broadband and BT, which brought broadband to two exchanges serving the area in July and September 2003, after realising that enough people were interested in getting broadband to make it worth its while.

There are sound reasons for them to choose Your Broadband over BT, says Davison: tailored add-ons, such as an interactive forum for local companies, and faster data transfer. Your Broadband's system can carry data at up to 4MB per second in one direction (necessary to transmit video), or 2MB per second in either direction at the same time. BT's service transmits 1MB per second, with incoming data moving faster than outgoing data.

Your Broadband's target is to sign up a couple of hundred business customers by mid-2005 – "that's when the economies of scale start to stack up," says Davison. So far, 40 local companies have joined.

One of them is Jobs Education Training South Liverpool, where broadband will speed up access to a city-wide jobs database for clients and staff. Although BT's service would only cost slightly more and has a long history of successful service, director Nick Hughes prefers the newcomer. "It's not a faceless non-entity, it's people we know," he says. "They took the risk to get something done. We're interested in supporting a local organisation that's there for the benefit of the community, the same as we are."

Your Broadband's four dedicated support staff and contract with an internet company to manage its broadband services were also a selling point, he adds: "If we have a technical problem, they're only a mile away."

The added competition is all for the greater good, according to a BT spokesman: "The broadband market in the UK is one of the most competitive in Europe and a wide choice of providers has helped get to a position where more than 85% of UK households are within reach of broadband."

Liverpool … and beyond
Your Broadband is a "major risk" for South Liverpool Housing, but a risk worth taking, says Davison. In fact, the venture is seen as "a major part of SLH's future", he says – just as well, considering that break-even point will not be reached until three to five years into the business plan.

And the association has ambitions beyond Speke and Garston. It has discussed the option of taking the Your Broadband brand beyond South Liverpool, through partnering or consultancy arrangements with other social housing providers. "If people want to replicate it, we'll work with them," says Davison.

The result could be a virtuous cycle of benefits offered by economies of scale. "Associations are scared of taking it up because of the costs, but those come down if we start to aggregate them," says Davison. "Other people don't need to go through the pain barrier we've been through.

"Technology makes a difference, and you can make money from it," Davison says. "Why shouldn't the family of housing associations get involved?

The science bit

South Liverpool Housing and technology consultant Knowware installed digital subscriber line access module equipment in a street cabinet outside one BT exchange. DSLAM allows fast digital data to travel along the full bandwidth of existing copper wires, so no new cable needs to be laid. At the moment, ordinary telephone services use only the centre portion of each cable. Eventually, the Speke and Garston service will involve two more exchanges.

Source

Housing Today