Broadband providers using BT Wholesale services should have now had confirmation of price changes to the products they use. We featured news on the proposed changes back in November 2006 ('BT Wholesale Price Changes' and 'More on BT Wholesale price cuts'). Details of the pricing that will come into effect at the wholesale level as of 1st May 2007:
These prices do not include the rebates available for Tier 1 exchanges which number 1016 exchanges in total. The rebate scheme replaces the previous rebate of £1.10 or £1.40 on the busiest 561 exchanges with a monthly rebate of £1.24 across 1016 exchanges.
The CBC products stand for Capacity Based Charging and a key factor of the price changes was to rebalance the pricing for CBC based BT Centrals. The impact analysis of this from November 2006 is worth a read to see what the expected impact of the price changes will be. The prices for the BT Central components, that the broadband provider must rent to link its own network to that of BT Wholesale, are listed below:
A key change not reflected by the table above is that with a CBC based BT Central, a fee of £0.63 per month will be charged per End-user as a bandwidth rental fee. This adds up to a total of £7.56 per year, so a Central with 30,000 end-users on it would have an additional charge of £226,800.
The only providers we are aware of using BT Central Plus products are BT Retail (Plusnet now owned by BT is using Central Plus in a small trial also), and they must purchase both an Access and Internet component. An ISP can reduce its costs by having fewer Internet components than it has Access components. This is useful when the interconnect options of BT Central Plus are used to host content servers which do not need Internet access.
The biggest change is the introduction of the cessation charge which reflects what BT Wholesale is charged by BT Openreach when an ADSL connection is ceased. This charge will normally only be raised to the broadband provider when broadband is no longer required on a line, or when moving home. Additionally, in cases where broadband was automatically ceased due to name changes on the phone bill, the charge may be raised. If you are remaining in your home and changing provider you can avoid the cessation charge by making use of the MAC code migration process to change providers. BT Wholesale indicates that the reduction in connection charge should offset the costs to service providers, but only time will tell whether providers decide to absorb this fee or pass it on to the end-user.
These price changes mean there is potential for providers to drop their retail prices by a pound or two a month. Alternatively it gives the provider an opportunity to invest in new capacity by keeping its retail prices relatively fixed and thus start to add capacity for the expected increases in average usage during 2007.