Once upon a time there was a very highly regarded supplier called 'Be'. O2 - owned by Spanish telecoms giant Telefonica - spotted them, liked what they saw, and bought them to form the basis of their own broadband operation in the UK. That too, was highly regarded, with a competent service at a good price (particularly for O2 mobile customers). But the news that O2 are now selling it to Sky is not a surprise, as there have been indications for a number of months.
The big giveaway was the fact that O2 did not have a fibre offering. For those who are not aware, the big thing in home internet connectivity is now fibre, which offers far higher speeds than regular broadband over copper telephone wires. Virgin have offered it for several years, albeit only in areas where they provide cable television. A couple of years ago BT launched 'Infinity', with the potential to go nationwide. Other big name suppliers - Sky and TalkTalk - have followed suit (although no matter who you go with you'll still end up with a BT Openreach box in your home). Problem is: for a supplier to offer fibre requires a considerable amount of investment. The challenge for a second tier supplier (in terms of size, not necessarily quality) is whether it is a good use of shareholders money to do so. It is rather suspected in some circles than O2 looked at the numbers, decided there were better things to spend the money on, and decided to sell to Sky.
At the moment, fibre is still a premium product. But, prices are falling. For instance, TalkTalk now offers 'medium speed' fibre for just an extra £10 a month. For many people, this will give them a connection in the order of 25-40Mbits/sec, or around 10 times the speed of a standard broadband connection. Realistically, several years down the track fibre will be the norm, most people will get these speeds, and there will be little or no price premium. Meanwhile, next generation fibre speeds will offer speeds of 100-200Mb for those who want and are prepared to pay for more.