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Tiscali attacks the new cessation charge from BT Wholesale
Wednesday 15 November 2006 16:59:00 by Andrew Ferguson

CommsDealer has a short statement from Tiscali about the pricing changes announced on Monday. The statement is reproduced below:

"Without a review of Datastream pricing, the new wholesale IPStream pricing must surely fail the margin squeeze test determined by the regulator and designed to encourage deeper competition. We fully expect that Ofcom will take a look at this immediately. In addition, it is hard to understand and justify the new £33.75 cease charge, when it has never been levied before."

Statement from Tiscali

We presume Tiscali is not happy with the proposed reductions in port rental for Datastream, or the 'low start' BT Datastream product offering. The margin squeeze test has not really been talked about much since 2004 when it produced price rises for the standard prices for BT IPStream Office products. The release sent to broadband providers by BT Wholesale detailed an increase in the number of exchanges that the rebate scheme for BT Datastream applies to, rising from 561 exchanges to 1016. The rebate is worth £1.15 a month and reduces the port rental cost to £5.90. As with IPstream there is an additional component to add, and this covers the costs of the backhaul from the exchange (often referred to as a virtual path) to the ATM handover point where it enters the Datastream providers own network. The 'low start' 9Mbps BT Datastream virtual path (VP) option is meant to encourage providers to move up to higher size backhauls, the price is the same as a 2Mbps VP for the first 12 months the provider has it, rising to the standard price for the remaining 6 months of the minimum 18 month contract.

The issue of the cessation charge is more complex, some coverage has suggested that this fee is levied on providers after a user has changed to another provider. The reality is that the charge will only be levied if the user changes connection without using a specific migration product. Some examples would be, you are stopping an ADSL service at one property and not connecting to another ADSL service, changing provider when the losing provider refuses to provide a MAC code. This should encourage providers to make use of the migration code, as that route will be cheaper for all parties.

So why has this charge suddenly appeared? Well it is not a new thing at all, Openreach has it on their price list as appearing on 1st April 2005, and is the charge for disconnecting a shared unbundled line (i.e. one where the phone service is via BT, but the ADSL is via an unbundled provider). So this has affected unbundled providers for a long time, but with the equivalence rules currently being implemented in the various sections of BT, Openreach will be treating BT Wholesale ADSL connections identically to other shared LLU connection from 31st December 2006.

Is the new cessation charge fair? Well it is to be charged the same to all providers using Openreach services, so if Tiscali think it is unfair, then one wonders why it has not been more public about this as a broadband provider already using unbundled services. I am sure there is going to be some interesting meetings at Ofcom discussing what is the right thing for the industry, and more importantly the millions of broadband consumers in the UK. One option would be for BT Wholesale to load the costs of the cease charge into the activation fee, but there has been complaints in the past that the £40 fee was too high already.


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