Low-cost broadband gives ISPs no incentives to improve infrastructure

People are paying less for faster broadband speeds a survey has found but experts warn these lower prices could come at a cost.

Average broadband prices have dropped by more than a third over the past four years, while connection speeds have become faster, according to the Uswitch price comparison site.

However, analysts warn the picture is not as rosy as the research makes out.

Jupiter Research director Ian Fogg said: “As the research has shown, consumers are not actually getting the speeds promised. They are just paying for 'up to' marketing promises, rather than for actual speeds.

"The current low prices could also mean that the UK’s current infrastructure would remain how it was as internet service providers (ISPs) fight to keep costs down."

In its research, Uswitch found that people were paying 36 per cent less for their broadband than they were four years ago.

It said that in 2004, customers could expect to pay an average of £27 per month for an 512Kbits/sec connection. Now many are signed up to packages with speeds of up to 8Mbits/sec at an average monthly cost of £17.

Jupiter Research said the price of broadband will continue to fall as a result of a competitive market because people shop around for the cheapest packages.

"There are enough ISPs jostling in the market to keep up competition, and keep prices going down," said Fogg.

However, he said consumers should be wary because Uswitch’s claims that broadband speeds were 16 times faster were “not accurate".

Fogg also said the slim profit margins for the ISPs mean that there was unlikely to be an improvement in speeds or infrastructure because ISPs have no incentive to put money into their services.

"At the moment ISPs are caught in a vicious circle with customers refusing to pay premiums for a service they don't receive, but people won't pay for these until an improvement is seen," he said.