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Some ISPs have complained to PC Pro that demand for broadband has soared so dramatically that Britain's telecoms infrastructure is close to breaking point. What's more, they claim the flood of new 'free' entrants could stall investment in the next-generation high-speed telecoms system that's set to replace the creaking ADSL network, because BT would no longer have sufficient market share to make it worthwhile. Both claims are emphatically denied by BT.

Sheffield-based ISP PlusNet is one of the providers that's chosen to voice its concerns about the state of Britain's broadband. CEO Lee Stafford told us that demand for high bandwidth applications such as file sharing and video downloads have almost trebled since the end of last year. 'We're now in a world where connection speeds have increased, bandwidth-driving applications are more readily available and everyone's infrastructure is full. It means broadband is slowing down at evenings,' claims Stafford.

Another ISP, which refused to be named through fear of retribution, also claimed that BT had 'difficulty in coping with demand' for its ADSL Max service and that it didn't 'think anyone's hitting the [up to 8Mb/sec] capacity it was described as'. The high number of complaints about connection speeds on the forums of websites such as ISP Review suggests customers are equally concerned.

BT refutes claims that its network is running out of capacity as 'utter rubbish'. 'Broadband is absolutely not slowing down,' says Angus Flett, director of product management at BT Wholesale. 'I know my [ADSL Max] fault rates are lower than the 2Mb/sec product.'

Whether or not Britain's broadband performance is suffering, there was hope that speeds would increase in the long term with BT's $10 billion investment in the next-generation 21CN network. This would see the country's ageing circuit-switching PSTN network replaced with one based on Internet Protocol (IP),

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bringing with it much higher broadband speeds and improved VoIP telephony services.

However, Stafford claims that investment is now under threat. The 'free' providers such as The Carphone Warehouse, Sky and Orange are building their services on telephone exchanges that have gone through Local Loop Unbundling (LLU) - where ISPs place their own equipment in BT's exchanges - a process that's finally gaining significant momentum. There are 673,000 telephone lines connected to unbundled exchanges according to the Telecommunications Adjudicator, and it predicts that figure will rise to well over a million by the end of the year.

Stafford says that if the 'free' providers continue to attract customers at their current rate, 'LLU will be north of 10m lines'. And he claims that's bad news for BT's grand network investment plans. 'For BT to spend billions on 21CN, it has to have certainty over the investment. LLU will fracture the infrastructure, and nobody's going to invest in it.' Again, BT refutes the claims and says it will continue to invest heavily in 21CN to help it compete. 'LLU is a competitive play. There's a massive incentive to differentiate through the core of our network,' says Flett.

Yet, even if BT's investment in the next-generation network survives, it seems likely that some of the traditional ISPs won't. All of the ISPs we've spoken to bullishly claim their subscriber growth has been unaffected by the booming popularity of the 'free' providers, claiming that the bulk of customers flocking to the freebies are either broadband newcomers or perennial switchers who always look for the cheapest deals. However, they all concede they're in discussions with potential partners to offer mobile or television packages.

Zen Internet claims it will continue to thrive thanks to its business customers, who are unlikely to entrust their connection to providers who only supply broadband as an additional extra. 'Business customers want an Internet connection they can rely on, that's well supported,' says the company's managing director, Richard Tang. Nevertheless, Tang concedes that, 'independent ISPs in the consumer space have something to worry about'.

With brokers declaring that the broadband market is swiftly becoming a bloodbath, the warning signs are looming large for Britain's Internet industry. A period of consolidation seems almost inevitable. The free dial-up revolution pioneered by Freeserve in the late 1990s brought the British internet industry to life; the free broadband movement of 2006 could be remembered as the initiative that killed it.