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BT increase broadband wholesale prices. Will consumers feel the pinch?
Wednesday 05 November 2008 15:22:16 by John Hunt

With the next generation of broadband products from BT based on WBC (Wholesale Broadband Connect) expected to be available to 40% of the UK by March 2009, BT have announced price rises on the older IPStream based infrastructure to try and encourage take up of the new products. This includes the withdrawal of the rebate scheme that is applied across exchanges where there is a large amount of competition.

This comes as a bit of a surprise following an offer for free Installation on BT IPStream Centrals due to the delay of the launch of WBMC with IPStream Connect, and may well be enough to offset that reduction. WBMC with IPStream Connect will allow an easy migration for service providers from existing infrastructure over to the new 21CN, but with WBMC on IPStream Connect not expecting to surface until possibly September 2009, ISPs will be forced to run both the old and new systems side by side, and face these higher costs.

The numbers indicate some price rises in December 2008, and some falls in January 2009. The monthly rental per end user will fall in January by £0.29 for IPStream Max and IPStream Max Premium products, but costs will rise for those still using the legacy fixed rate IPStream products. Central prices are increasing in price from 1st December, and the rebate that was applied to qualifying exchanges is being scrapped in favour of "customer specific offers".

Taking an analysis of the pricing and the adjustments in prices since May 2007, we have produced the following table based on CBC (Capacity Based Charging) IPStream Max end users on a single 622Mbps BT Central pipe which gives an idea of how prices have varied. The figures show a cost per user which includes a proportion of the cost of the Central pipe, and includes rebates averaged across the all users. Service providers will currently be on the 'CBC Jan 08' pricing.

Number of Users CBC May 07 CBC Jan 08 CBC Dec 08 CBC Jan 09
5,000 £26.83 £21.18 £25.03 £24.74
10,000 £17.14 £14.28 £16.46 £16.17
20,000 £12.30 £10.83 £12.17 £11.88
30,000 £10.68 £9.68 £10.74 £10.45
40,000 £9.88 £9.10 £10.02 £9.73
50,000 £9.39 £8.76 £9.60 £9.31

Whilst the numbers are simplified, it shows the increase in costs that are involved, following a trend of price reductions. We note that whilst 50,000 users on a BT Central is above the concurrent sessions limit, some ISPs may contend the number of users with the understanding that not everyone is online at the same time.

So could we be set to see price increases? ISPs will no doubt be studying their books to see what adjustments need to be made to their product pricing, particularly at the lower end of the market where margins are already very tight. We may perhaps even see more providers looking at alternate wholesale providers such as Tiscali or Cable & Wireless who are able to offer competing services.

One has to wonder if the changes were decided many months ago when at the time it looked likely that service providers would be migrating over to WBMC and IPStream Connect to backhaul their legacy customers, but the bean counters haven't taken into account the delays and when the product team are actually making things available.

As a small consolation for the few providers who are currently deploying 21CN services, WBC monthly end user rental is set to get a reduction of between 3.6% and 4.7%.


Posted by chrysalis over 8 years ago
incredible, at a time when central prices need to go down and port costs up, BT move in the opposite direction. Further favouring those on short lines, then remove the rebate further favouring villagers, glad I am of ipstream now is coming more and more of a joke.
Posted by CARPETBURN over 8 years ago
LOL good old BT maybe they missed the news people are cutting back rather than spending more
Posted by AndrueC over 8 years ago
It does seem a strange decision.
Posted by Dawn_Falcon over 8 years ago
Strange? It's perfectly logical Andrue. WBMC shifts many costs the ISP, BT wants all the ISP's to move across. Oh, plus they get to soak ISP's not willing to do a risky conversion.
Posted by c_j_ over 8 years ago
Amen to Dawn_Falcon there.

Are these changes subject to Ofcon approval or do BT get out of that these days because Ofcon decided that in many parts of the country there was "significant competition"?

BT have a huge pension fund deficit (so much for BT's employer-contributions-suspended "pension holiday" era), and huge losses at Global Services, to recover.

Not that I'd expect Ofcon to do much about BT anyway, but...
Posted by Davepa28 over 8 years ago
BT do want ISPs to move to WBMC however there is two big problems, ADSL2+ exchange rollout has considerable delays and the ability to migrate all legacy IPStream circuits onto the new WBMC host links through IPStream Connect has been delayed by up to 1 year! This means ISPs have to run two infrastructures, the old 20CN network and the new 21CN network increasing their costs considerably. BT may want ISPs to migrate but they do not have the ability to migrate onto the new network!
Posted by kamelion over 8 years ago
Typical BT trying to milk as much as they can. I could understand if wbc was well established but its a new technology (to the UK at least) and isn't available everywhere. OFCOM should be slapping BT for this.
Posted by andrew (Favicon staff member) over 8 years ago
WBC is not a technology, it is a product name for the 21CN broadband products, which will utilise ADSL2+ which has been in the UK for some time now, and BT research side has been involved in it for many years.
Posted by boggits over 8 years ago
If you were a cynic and believed there was a conspiracy going on, then this move pushes small/medium ISP's with heavy users onto LLU.

The Larger ISP's (i.e. BT Retail) can negotiate their discounts so they are less impacted but this creates a massive overload on LLU networks, reducing performance and forcing them to invest in backhaul/capacity and reducing their ability to provide 'unlimited' packages...

But then you would really have to be a member of the "Tin Hat Brigade" to believe that
Posted by comnut over 8 years ago
more deatils for those new to it..
Posted by c_j_ over 8 years ago
"a massive overload on LLU networks, reducing performance ... *INVEST* ... reducing their ability to provide 'unlimited' packages..."

But LLU bandwidth is free... every mickeytaker knows that. What next, you'll be claiming that the earth isn't supported by four elephants on a turtle? ;)
Posted by chrysalis over 8 years ago
Isp's with llu backhaul alongside bt centrals already put as many customers as possible onto llu this wont change that, to suggest it will cause llu overload is a bit strong :)
I think its a kick in the teeth to aaisp and entanet tho, who already as a result of putting faith into BT pay for 2 infrastructures.
Posted by CARPETBURN over 8 years ago
quote" think its a kick in the teeth to aaisp and entanet tho, who already as a result of putting faith into BT pay for 2 infrastructures."

Did BT even ever get AA customers connected to ADSL2+? Last i heard the BT ordering system was screwed.
Posted by chrysalis over 8 years ago
aaisp have customers on adsl2+ I think the issue was with their automated ordering system. But I expect they have been manually able to move customers over.
Posted by KeithJillings over 8 years ago
I couldn't work out whether those prices are per customer per month, per year, or what. Based on what I pay my ISP, I assume they are per year.

Typical BT, though. I remember when their share price was around £14. I sold mine long ago. Their death wish has pushed it to £1.20. 'Nuff said!
Posted by comnut over 8 years ago
yup, usual banter of 'you wont survive' - followed by BT getting bad results due to people leaving them... :)
Posted by Mister_C over 8 years ago
Karoo have already raised their prices for customers who haven't changed packages. Yup, that's right - Karoo introduced a new set of packages rather than migrate customers for free.

PS I hear that those still on steam dialup are also facing a price hike.
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