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Petition starts for 'upto' charge for an 'upto' service
Thursday 12 April 2012 09:36:16 by Andrew Ferguson

wispa Limited a communications consultancy based in rural Mid Wales has started an online petition that seeks to pressure Ofcom 'into actually doing something about your ISP charging you full price for an ‘upto’ service'.

Ofcom has a voluntary Broadband Speeds Code of Practice, the most visible aspect of which has been new customers being told what speed they should receive which it seems is not happening for 28% of those who responded to our broadband advertising survey. An often overlooked aspect of this was that if a customer was receiving a speed that more in line with a cheaper product the provider should offer this other product to the customer.

Alas most providers have just one broadband product speed available, and even where different speeds are available other differences like a lower usage limit apply, which will often not be appropriate.

The reason the retail market is like this is the introduction of flat-rate pricing by BT Wholesale back in 2004, where a line card port cost the same no matter what speed you connected at. The capacity and usage pricing elements have then meant that the current retail market of 2GB, 5GB, 10GB, 20GB etc usage allowance services have appeared. The situation is no different with unbundled services, who generally try to undercut BT Wholesale both on price and by offering unlimited packages. The GEA products from Openreach do have some degree of price variation based on speed, there is a £3.12+VAT per month difference between its 40 Mbps and 80 Mbps FTTC services.

If Ofcom is pressured into acting, it will need to re-write the book on broadband pricing, both at the retail and wholesale levels, representing a major change in its regulatory stance, where retail pricing has generally being left to market forces, with broadband starting at zero cost (Sky 2GB Lite service) a possible side effect may be price rises.

Comments

Posted by pcoventry76 over 5 years ago
Signed it - Hope it works! :)
Posted by Somerset over 5 years ago
What price range is proposed for 0-8M lines?

Does it imply that those on faster lines will pay more than they currently do if the ISP is to get the same total income from all their customers??
Posted by nmg196 over 5 years ago
I think you mean "up to". "Upto" is not a word.
Posted by New_Londoner over 5 years ago
Do doubt this will be followed by complaints when up to zero ISPs offer service on these lines!

Don't forget that there is already a disincentive for ISPs due to the dumbing down of the advertising rules for those people that apparently found "up to" too difficult to understand. Making these lines even less attractive by lowering the pricing could well see a total loss of interest from ISPs.

Be careful what you wish for!
Posted by nmg196 over 5 years ago
I still can't believe there are people intelligent enough to use a computer who still don't understand what "up to" means. How is it confusing? How will things improve when they sell it as "40Mb or lower".
Posted by andrew (Favicon staff member) over 5 years ago
Hence the '' as thats what the petition calls for
Posted by undecidedadrian over 5 years ago
So we want to go back to the early days of broadband with fixed line speed? Becuase that is what will happen if this gets in.

As to measure speed is very tricky over a given time with noise etc affecting a line speeds can vary quite a bit.

I can see a broadband rental charge with 5-10 meg steps and you get to pay so much per step.

Of course it may mean a return to £40-60 per month charges like in the early days and then we would hear the moaning start.
Posted by pcoventry76 over 5 years ago
not really.

It's what I pay now! if it was lower and more stable with less to no traffic management and throttling i'd be happy.

Oh hang on - so it is! It's called Sky Fibre!
Posted by ian9outof10 over 5 years ago
This is a stupid idea.

All it will eventually do is push up the price of the faster lines. No broadband company will charge less, especially given the whisper-fine margins these firms operate on.

The fact is, if you're stuck on a slow line, go for a capped package that costs less. You won't be able to download as much anyway, as your line speed is low, so you'll save money.
Posted by undecidedadrian over 5 years ago
Oh yeah Sky Fibre with the no throttling just a fixed 2 meg upload to do the same job so it just throttles all uploads.

But how would it work then? And how would speeds be measured as the ISP's would want to skew it as much as possible in their favour.

If people are too stupid to know what upto means they really should be not allowed an internet connection anyways.
Posted by fibrebunny over 5 years ago
Are there not already concerns that discounted adsl could result in less take up of FTTC. Surely such a move would only further this and so seems rather silly. Also a person on a longer line can download more than someone on a short line. A long line is bad luck but usage seems like the fairer charging option rather than speed.
Posted by jrawle over 5 years ago
I suspect it costs the company the same to provide a service to a property on a long line as it does a short line. So I don't see why the former should pay less. Surely it's the amount of data transferred that determines the cost, not the speed? In which case, different prices for different caps is more appropriate anyway.

Otherwise perhaps those of us who live in towns should pay lower council tax than villages in the same district, where local services cost much more to provide.
Posted by tommy45 over 5 years ago
Ideally i think the best route would be to have a sliding scale. So those who have short lines and can get 99.9% or over the advertised max speed,ie ADSL2+ 24mbps ADSL 1 8mbps , pay the full amount and those who get less pay less, upto a certain point, as it still has to be viable for the isp , maybe this would encourage ASDL services improve as it would be in the isp's interest to supply the highest speed possible, unlike the current situation
Posted by andrew (Favicon staff member) over 5 years ago
When the biggest factor for ADSL is line length, how does it encourage them to improve it?
Posted by otester over 5 years ago
New_Londoner hit the issue right on the head.

People seem to failure to understand their is a minimum cost...
Posted by roboraver over 5 years ago
Agree with New_Londoner and otester, this will only lead to bad things !

If it is not broke don't fix it
Posted by Somerset over 5 years ago
So... what would the price range be?
Posted by themanstan over 5 years ago
It'll simply lead to a change in pricing scheme should it be successful.

It'll be a two part charge, cost of provision and cost of speed. With the lion share being cost of provision and the price differential between speeds being piddling.
Posted by pcoventry76 over 5 years ago
@ian9outof10

virgin did. on average £11.25 a month that's a massive decrease in monthly cost - and it was their choice!
Posted by mike4ql over 5 years ago
My worry would be that ISPs will simply refuse to deliver a service in areas where they have a problem, i.e. rural areas where long lines are common, so the digital divide would become even greater.
Posted by GMAN99 over 5 years ago
Isn't broadband cheap enough already?

Do other countries have this "pay for what you sync at" model?
Posted by FelixTCat over 5 years ago
If I were an ISP I would simply offer an ADSL service with no speed guarantee for a fixed amount. I would then offer to discuss with a customer whether a faster service could be provided, and at what price. Wouldn't bother to mention speed at all.
Posted by SimonWindsor over 5 years ago
Whenever buying anything, quantity and quality should always play apart.

The quantity of broadband we use has a direct cost to the ISP, and hence they provide and charge for different bundles to reflect this.

The quality of broadband is determined by many factors, including the length and quality of line provided by BT Openreach. It makes sense that if the line is of poor quality, BT Openreach should receive less money from the Customer/ISP, giving BT Openreach the chance to invest in areas to provide FTTC/FTTP and gain extra revenue for providing a higher quality service.
Posted by themanstan over 5 years ago
@Simon

It will be then cheaper to simply say we won't supply. There is no requirement for any ISP to supply BB.
Posted by chrysalis over 5 years ago
adsl24 finally backed up what I have always said which is that burst speed is not free, even when BTw masked the charges onto usage fees, adsl24 said they need to invest in backhau for the 80mbit FTTC service which has proven my point. This mistake in 2004 has done a lot of damage to the market which still exists today.
Posted by SimonWindsor over 5 years ago
Ofcom already use a Market area strategy to allow BT Openreach to charge customers different amounts depending nominally on how many ISPs invest in an exchange. This can mean two houses on opposite sides of a street can pay £6.50 difference for broadband.

Scrap this and replace it with a charge based on quality (signal attenuation).

ISPs will see difference in revenue, BT will and can address this by investing. As it is, the BDUK project will be providing BT with lots of money to address this.
Posted by chrysalis over 5 years ago
ian9outof10 and whats wrong with prices going up for faster lines?
Posted by tommy45 over 5 years ago
@ GMAN99 , IO doubt they do, but some have better infrastructure than here in the uk ,So most get the advertised speeds,as for price i think it only fair to pay according to the sync your line will support , isp's could increase their prices for those who get the highest syncs

@andrew ( staff member) It would do directly, but it could lead to isp's applying some pressure on BT to improve things,
Posted by tommy45 over 5 years ago
cont: or at least provide something better than sin whatever it is , which means nothing really, Bt have gotten away with paying profits to share holders and not upgrading to vdsl2 before now, it's arrived a decade too late,and then there is the whole sfi visit's faults/charges thing, something needs changing more in the bill payers favor in that area too, as it is it's too one sided
Posted by tommy45 over 5 years ago
@andrew ( staff member) It would do in-directly, but it could lead to isp's applying some pressure on BT to improve things typo error corrected
Posted by andrew (Favicon staff member) over 5 years ago
Only if the basic voice line rental changed would Openreach see more money to invest in VDSL2.

In short the SMPF/MPF line rental fees would have to be based on distance.

The complications of figuring all this out, and dealing with queries is likely to lead to higher costs overall.

Ofcom could force it on Openreach, and would have to force it on Retail too, but with rules that the slower cheaper package was equal in all other respects to the faster one.

Also how many millions would downgrade to the minimum speed package for basic web browsing?
Posted by awoodland over 5 years ago
Why not go the whole hog and set a pricing scheme which reflects both the costs and the usage - a fixed part (length of cable/fibre divided by port density at the other end perhaps?) and then another charge based on the Shannon limit of the medium being used to deliver the service. That's fair as you pay for what you get.
Posted by andrew (Favicon staff member) over 5 years ago
Which would then be balanced that a longer line is more likely to have a fault
Posted by pcoventry76 over 5 years ago
In todays world you can get a varying price on your usenet access depending on what speed you want.

ISP's should do the same. Even though to a degree VM do theres still room for improvement

Posted by themanstan over 5 years ago
pcoventry76

That's not a like for like service. That's data access off a server, not physical supply of data capacity. They are very different things.
Posted by jumpmum over 5 years ago
How would this work for those who think they can only get 1Mb, but in reality if they optimised their home wiring could get 4Mb+. There are enough around if you look on the BB speed map! How would the ISP know what to charge them? Who takes the hit on the revenue Openreach, the ISP? On replacement costs the longer lines should pay more! Port is the same more copper with higher fault rate so higher cost. May be better for everyone to stick to the present subsidise same cost within each area.
Posted by 21again over 5 years ago
Forget charging for speed as it varies too much for a lot of connections, probably best to charge for usage at say one pound per GB don't see why unlimited has to be subsidised by other users on capped usage rates.
Posted by _sjr_ over 5 years ago
I really don't see the problem with 'up to' where everybody pays the same. With sync speed based charging a little old lady who happens to live next door to the exchange and gets 24Mb is penalised even though she might use less than 1GB a month, whereas me with a 4Mb connection can still pull down >1TB a month if I really tried would pay less? Crazy talk.
Posted by godsell4 over 5 years ago
It is not just the BTW line rental costs to be considered, the ISP's do have infrastructure costs which are affected by actual line speeds. Just because the line sync maybe 6Mb or 600Mb, a user could agree to a rate limit of upto 2Mb if that would get them a cheaper deal from their ISP, in turn the ISP would not need such an investment in their infrastructure. Many people would be fine for most purposes on a 2Mb connection.
Posted by chrysalis over 5 years ago
no charging for usage is what the high speed low usage crowd want only thinking of themselves, its worth pointing out the pricing model employed since 2004 on adsl is an anomoly and not standard practice. Its artificial pricing forced by ofcom to increase takeup. The high usage fees on BTw backhaul is artificial to subsidise the lack of burst speed fees on the ports. Also charging per gig is in the dark ages. average usage is in 10s of gigs now days.
Posted by chrysalis over 5 years ago
I am not going as far as to say price shoud be dynamic based on sync speed thats silly, however there needs to be multiple graded products priced at different levels. so we dont get people signing up to eg. a upto 16mbit adsl service on a 1meg sync paying the same as someone on a 15meg sync, thats just plain wrong. I would eg. have a 4meg adsl product priced lower than the 16meg product. I will say it again and keep saying it, burst speed isnt free, its also a premium feature thats been devalued by artifical pricing.
Posted by otester over 5 years ago
@chrysalis

Problem is you fail to see that their is a minimum price, the difference between that and what they currently charge is negligible.
Posted by andrew (Favicon staff member) over 5 years ago
@otester @chrysalis

For example £7.50 up to 16 Meg service, how low should you go if its a 1 Meg service?

If the difference was £15 between 4Meg and 16Meg I can see the point, but if we are talking 20p to 50p then its lots of effort for little gain.

Posted by pcoventry76 over 5 years ago
Nice to read about VM tucking away 48 million profit for this quarter, on my 100mbps connection which is now at 4mbps.
Posted by pcoventry76 over 5 years ago
I win the sarcasm award! :/
Posted by AndrueC over 5 years ago
If they charge less for longer lines then longer lines will earn less profit so ISPs will stop providing a service. You can't fight the laws of physics and the cost of upgrading a longer line to better speeds is prohibitive most of the time.
Posted by AndrueC over 5 years ago
@pcoventry76:Maybe those figures explain why VM finally made a profit last quarter :D
Posted by andrew (Favicon staff member) over 5 years ago
@AndrueC

Who says broadband is profitable?
Willing to bet that the majority of profit comes from the rental/calls bundling. The cost of which is immune to this sort of tweaking.

In fact BB prices might go down, and voice rental go up to compensate.
Posted by GMAN99 over 5 years ago
I don't think broadband can be profitable, not anymore not these days. Like you say its the extra services that make the money
Posted by otester over 5 years ago
@andrew

What did you mean by some of the cheaper packages with lower usage aren't always appropriate?
Posted by andrew (Favicon staff member) over 5 years ago
Some providers have had cheaper product options with slower speeds, but often they also only have a smaller usage allowance.

Or do we assume that people on a 4 Meg line, will download a lot less than someone on a 12 Meg line?
Posted by undecidedadrian over 5 years ago
Hmm a Welsh lobby firm has a petition for up to pricing and suddenly a Welash fixed wireless provider supports it.

I wonder if the 2 companies are connected in any way?
Posted by otester over 5 years ago
@andrew

This really only affects LLU providers then as there are tonnes of packages with tonnes of different providers via BTW, but then again LLU is a lot cheaper than BTW.
Posted by bcs over 5 years ago
Charge on a tiered basis and the expectation will be you'll see those throughput speeds all the time.

Fact is, the service is contended, it's delivered over technology which is variable and is ultimately cheap and cheerful.

If you buy a sports car, you accept speed restrictions on the roads even though you've paid more than someone else using that same road travelling at a slower speed. Likewise, both drivers can expect traffic or accidents to occur from time to time. If you want to get the maximum all the time you buy you're own road.
Posted by herdwick over 5 years ago
Peak traffic flow drives the variable element of cost and peak traffic flow is only loosely tied to speed. If you have several hundred Mbits/s of connectivity as an ISP or telephone exchange it doesn't matter what individual burst speeds are as none are anywhere near the limit.

Once you disconnect cost and price stupidity and unintended consequences result.

A sub 0.5M customer can download more than a 6M customer at peak times, requiring more capacity in the system. Why should they pay less.
Posted by herdwick over 5 years ago
Chrysalis bangs on about burst speed not being free, but can't explain why talk talk and others provision at 100 kbits/s per customer and have only increased this in line with GB per month demand and not with speed upgrades. Does 100 kbits/s reflect burst speed ? No. Simple.

If a connection is as contended as retail broadband burst speed is indeed free, nobody runs out to add capacity if a customer is added or if a line syncs at a higher rate. I can burst to 6M by taking 10k off 600 other users and they won't notice.
Posted by Oddball over 5 years ago
Sorry I did not read all the comments but from what I feel about this (Posted in a seperate comment) they should charge you for the rate you sync at. If you are told you can get 'up to' 24Mbit and only get 12 then it should be half the price! Or at least heavily discounted. The problem lies in the way a connection is charged for through wholesale of course which is fixed at a wholesale price so might not be practical. Perhaps a better option would be to charge a fixed price for the connection as per normal and then charge increments over that for the speed you sync at.
Posted by Oddball over 5 years ago
This may mean that some people on full rate have to pay quite a bit more than they currently do though in order to subsidize slower speeds?
Posted by camieabz over 5 years ago
"The reason the retail market is like this is the introduction of flat-rate pricing by BT Wholesale back in 2004, where a line card port cost the same no matter what speed you connected at."

This seems to be the crux of the matter. Surely there could be scope to restructure that aspect of things?
Posted by otester over 5 years ago
@Oddball

The problem is you don't seem to understand that there is more to the cost of providing service than bandwidth.
Posted by andrew (Favicon staff member) over 5 years ago
@camieabz

The reason the charging changed, was that with a speed based charging up to 8Meg was going to cost £60 to £70 a month.

A rebalance may be possible, but the port cost is so low already, that we would see the average speed at current price, slower a little lower and faster a little higher.

Use of a standing charge, and people pay for burst speed on top might work, but to be honest people won't understand the bursting. Or am I wrong?
Posted by Somerset over 5 years ago
@andrew - and if the price difference is small is it really worth it?
Posted by chrysalis over 5 years ago
I agree if the price is just 20p diff then its also silly. What we seeing is a problem of a a overcompetitive market. In reality there should be no £7.50 up to 16meg products thats underpriced. So what I see as fair is dropping the speeds on the current packages sold and then adding new higher speed packages for an extra few £ a month. (like VM does). But no isp will do that as the market is too competitive.
Posted by chrysalis over 5 years ago
andrew I would just rebalance, as it seems adsl isp's stick rigidly to BTw port costs and then write off or rather digest the costs of providing bust speed on backhauls into the basic monthly fees, by traffic shaping and/or adding usage fees. The fix to me is lower the cost of BTw backhaul and increase the cost of higher burst speed on BTw adsl ports. I would also increase the pricing gap between 40mbit and 80mbit FTTC ports.
Posted by chrysalis over 5 years ago
herdwick actually adsl24 posted the exact opposite to what you just said in public, they stated they will be increasing their capacity to cater for the new 80mbit services and that will likely affect the price they sell at. Talktalk on the figures you posted you basically just said they increased contention ratio to counter the increased cost. It would hardly be free if contention ratio was maintained would it.
Posted by chrysalis over 5 years ago
also its peak time demand that drives costs.
higher burst speeds increase peak time demand.
eg. a 512kbit user downloading a dvdr cant even do that all in peak, it will spread to off peak, whilst a 80mbit user could download it in a matter of minutes putting all the demand on the network in a large chunk at once. There is a reason 95th percentile exists you know and its a long term standard. Herdwick seems to have forgotten the current pricing is artificial and not what BTs natural charging formula was.
Posted by chrysalis over 5 years ago
Also whilst a slow speed user can download more than a high speed user, the rule of averages the higher speed user will download more anyway. Plus I couldnt sell like or adsl isp's do, I wouldnt sleep at night knowing I am ripping people off who have crappy syncs.
Posted by New_Londoner over 5 years ago
@chrysalis
A different way of looking at this is to ask yourself whether every single ISP is stupid.

There is no law forcing all the ISPs to follow the same pricing model, and in fact you do see quite a lot of variation around, for example, usage caps at peak times, whether this includes upload etc.

There is nothing stopping an ISP introducing a different model entirely. If you feel that there is a market for say a low max sync speed together with a relatively low download limit and with charged download beyond that, then by all means introduce it and see what demand you get.
Posted by New_Londoner over 5 years ago
Contd.

If you're right then your offer will be successful and no doubt other ISPs will follow your lead. Of course if you're wrong and the other ISPs have not all overlooked an opportunity then the business will fail and the status quo will prevail.

Note this needs no involvement from Ofcom and no (presumably forced) changes to Wholesale's pricing model.
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