Sky’s £38 for 1.6Gbps puts the business broadband premium on notice

On 25 September Sky announced Full Fibre 1.6 Gbps, its fastest product on Openreach’s network, from £38 a month for new customers. The release says the tier reaches “nearly four out of five (79%) UK homes” and that Sky’s full fiber range now runs from £24 a month for 75Mbps up to 5Gbps, which is available to 14% of UK homes over CityFibre. According to ISPreview, which reported the launch on 25 September, the package rides Openreach’s 1.8Gbps wholesale tier with 120Mbps upload, comes on a 24-month contract and replaces 900Mbps as Sky’s Openreach ceiling. Many of Sky’s competitors have sold the same tier for some time, ISPreview says.

Ben Case, managing director of connectivity at Sky, says the launch marks “another important milestone in Sky Broadband’s commitment to delivering faster, future-ready broadband designed for increasingly connected homes.”

The homes are the point. This is a consumer launch, and Sky’s release does not mention business customers. But the people who own, run and sign off IT budgets at small and mid-sized firms live in those homes, and a large share of them can now buy 1.6Gbps for less than the cost of a family dinner out. The question for any business on an Openreach-based line is what its office connection is worth at the next renewal.

The thesis for customers is simple. The business connectivity price ladder – consumer broadband at the bottom, ‘business broadband’ at a premium, entry-level Ethernet at a multiple above that – has always relied on a visible gap in headline speed between the rungs. Sky has just joined the brands removing the gap at the bottom, and the price will only fall from here. A business paying the premium should be able to say what it buys for it.

The ladder is being kicked from below

Openreach’s own figures show why this is a matter of months. Its 19 August release on the wider rollout of ‘Next Gen Full Fibre’ says the network now reaches 23.4 million premises, that 9.4 million customers have taken full fiber and that 1.8Gbps is the current top speed. The same release says Openreach intends to make XGS-PON, its 10Gbps-capable technology, available to more than 1 million premises within 12 months, with speeds of up to 8.5Gbps, and is looking to cover about a third of its full fiber footprint with it over five years.

So the multi-gigabit consumer tier is not a Sky experiment. With Sky now alongside its rivals on Openreach’s 1.8Gbps product, retail competition on that speed can only sharpen. A business being quoted a 100Mbps or 200Mbps business fiber-to-the-premises (FTTP) line on the same Openreach infrastructure, at a price that only made sense when the consumer alternative was 900Mbps, is being sold a comparison the provider can no longer win on the numbers.

The entry-level Ethernet rung is not safe either. The case for a 100Mbps leased line has been guaranteed bandwidth and a real fix time. The bandwidth half of that pitch now looks thin next to the 1.6Gbps Sky advertises from £38. What remains is the fix time.

What £38 does not buy

That is where the like-for-like comparison ends. Read the Sky release for what it does not say. There is no service level agreement, no fix time, no static internet protocol (IP) address and no mention of business use at all. The upload figure is disputed: ISPreview reports 120Mbps against 1.8Gbps down, while a footnote to Sky’s release gives an average of 1Gbps up. At 120Mbps it is a consumer ratio: fine for a household streaming in four rooms, poor for a firm backing up to the cloud, running voice over the line or hosting anything. The 24-month term is a consumer term. The only guarantee Sky mentions is on Wi-Fi speed inside the house, sold as a £6-a-month add-on and remedied with money back, which is no use to a business when the card machines go down at lunchtime.

The case for a business line should never have been speed. It is that the business cannot afford to be offline, and needs the line to behave predictably for the applications that run it. A fixed public IP address, a fix commitment backed by service credits, a second circuit or mobile failover that switches over unnoticed, a managed router the provider can see into and someone who answers the phone when the line drops: none of that is mentioned in the £38 offer. Those are the items a business should expect to pay for.

Pay for the contract, not the speed

The prescription follows. When the renewal quote arrives, ignore the download figure at the top. Ask what happens when the line fails, how fast it is fixed, who pays if it is not and what the business keeps running in the meantime. Ask for the upload speed as a headline figure, because a symmetrical circuit uploads as fast as it downloads and the consumer tier does not. Treat the static IP, the monitoring and the failover as the product, with the bandwidth thrown in.

The £38 is a bargaining chip if it is played properly. Opening the renewal by saying the home line is faster and cheaper earns a lecture on service levels. Opening by listing what the current contract does not include – no fix commitment, no static IP, no failover, a consumer upload ratio – and asking why the business pays a premium over the Sky price for the same Openreach fiber puts a case the provider must answer. Providers and resellers that cannot answer it should expect to lose the line; the ones that can will reprice before being asked.

Speed was the connectivity industry’s product for two decades. From 25 September it is the free gift, and a business with nothing else on its invoice should ask what the rest of the bill is for.