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BT notifies Ofcom of IPstream capacity charging pricing
Thursday 13 May 2004 10:18:00 by Andrew Ferguson

BT's Serviceview website carries the new pricing plan for the IPstream capacity based charging model, which will take effect from 28th May 2004. The prices have been re-jigged since the earlier discussion documents appeared. The new pricing is shown below:

Product   Monthly price (ex. VAT)
BT IPstream Home 500   £8.40
BT IPstream Home 1000   £8.40
BT IPstream Office 500   £12.40
BT IPstream Office 1000   £12.40
BT IPstream Office 2000   £12.40

The full pricing is available on BT's Electronic Price List, this includes the new prices for the BT Central products that ISP's must rent to link from the BT POP to the ISP's own network. A BT Central 155 Mbit/s L2TP Passthrough product under the existing price model costs £45,000 per year, and £50,000 for the initial connection. Under the new capacity charging model this will be £316,200 per year, and still £50,000 to connect it.

The capacity charging model is flat-rate, i.e. there is no charge to the ISP depending on how much bandwidth is used, rather it is up-to the service provider how many users they fit onto each BT Central, i.e. they control the level of contention you see. So if an ISP were to populate a 155Mbps with 8000 users it would actually cost £3.30 per user per month (excluding connection fee), which would bring us back to roughly the current pricing for BT IPstream Home 500.

The key benefit for the capacity model is that the Office 2000 product is now available for £12.40 a month, and ISP's then need to allow for the costs of the BT Central bandwidth the user would require (plus other costs like wages etc). This means that there is the real possibility of 2Mbps products being released into the home market, potentially as low as £20/month. Though it is more likely to be in the £28-£35 area.

NOTE: The new pricing would only take effect if an ISP switches it's BT Central products to the Capacity based pricing model. So do not expect wide-spread price cuts on existing products at this time.

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