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Wholesale metered broadband the key to faster home services?
Thursday 22 January 2004 12:59:00 by Andrew Ferguson

BT Wholesale has published a press release that outlines the details for a new style of IPStream ADSL product. Metered broadband sounds like something that no-one would want, but the new product offers services providers new options and possibly will lead the way to new products in the retail market.

A key point to be drawn from the press release is that the end-user monthly access charge for the ADSL line will be below £13/month and that is regardless of the speed that the line connects to the exchange at. Therefore it will cost the same for an ISP to supply a user with a 2Mbps connection as a 0.5Mbps connection if they use the same amount of bandwidth per month. This may actually drive ISPs to offer cheaper 2Mbps services to users, while knowing that users will be unlikely to abuse the service by downloading the full potential of 20GB per day. Alternatively a low bandwidth 0.5Mbps product that is less than £13/month including VAT, will attract dial-up users onto the ADSL platform. This will allow people to leave their connection on 24/7 for email and instant messenger use but otherwise idle.

One exciting prospect may be for those people who are out of range of 1Mbps and 2Mbps products or even a 0.5Mbps product, is that if BT Wholesale was to release a rate-adaptive product for downstream and upstream, charging on a bandwidth used model, rather than a maximum potential speed model may appear fairer to end-users. People would not like to subscribe to a rate adaptive 1Mbps service, and only be getting 0.64Mbps but paying the same as someone who gets 0.96Mbps.

The new service will consist of three charges to the service providers, and how this is presented to the public will vary from ISP to ISP if they decide to use the product. The charges will be the end-user access charge at less than £13/month, the BT Central or BT Central Plus product charge (e.g. £40,000 per year for a 155Mbps BT Central) to connect the ISP to the Wholesale network, and finally the ISP will be billed a usage charge on a monthly basis. Though it appears the usage charge, is not per user, but an aggregate charge, though ISPs should be able to monitor an individuals usage if they wish to charge users according to their individual usage.

This new pricing model is something that the wholesalers making use of the BT Datastream with In-span handover product could potentially do. In fact it will be interesting to see what the reaction is from that segment of the market. It is entirely possible that this latest move from BT Wholesale will be interpreted as a 'margin squeeze' event, and thus trigger complaints to Ofcom.


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