Satellite broadband 'rips-off' helpless SMEs

The UK's small and medium sized businesses are being 'fleeced' by satellite broadband operators, according to one expert in the field.

Cedar Telecommunications recently launched the UK's first satellite broadband service which is aimed at SMEs, and promises price and performance to rival DSL and ISDN.

The top Cedar package has a 256Kbps uplink and 512Kbps downlink, matching basic DSL, with capped downloads of one gigabyte for £300 per month for multi-user access.

The installation fee for Cedar's satellite is £600, slightly less than a leased line.

But one satellite expert says SMEs are being ripped-off, as the service cannot be considered a viable business proposition.

Roger Runswick, satellite expert at telecoms consultancy Schema, claims that satellite broadband is restricted by a maximum bandwidth per satellite, so a busy service forces providers to cut down the bandwidth available to users.

"The problem with any satellite offering is they have a restricted link, as opposed to DSL or a leased line that offer unrestricted limit for downloads," Runswick explained.

But Cedar is charging customers a price equivalent to expensive leased line services.

"Cedar is effectively charging leased line prices with restricted bandwidth whereas leased line allows unlimited download," said Runswick, who added that the one gig limit is not enough for the average SME.

"If a SME only received five Powerpoint downloads a day that would add up to at least three gigabytes each month," he said.

A spokesman for Cedar said: "Compared to ISDN, we do look expensive. But you need to be around three miles from a major exchange to get ISDN. At the rate BT is selling off its business in the UK, will they be extending ISDN networks? No. We provide an alternative."

A DSL line with at least the same bandwidth as leased line would cost around £130 per month and is available to 60 per cent of the UK population. However, the 512Kbps figure is only theoretically available: many current users of ADSL experience significantly lower performance.