First service provider increases its 2Mbps service costs
Plusnet is one of the first service providers to have the unpleasant task of passing on a price rise from BT Wholesale of £5+VAT on the BT IPStream Office 2000 service, announced here. The wholesale price change is from £38 to £43+VAT.
Plusnet has sent out a letter to existing subscribers informing them that from their next invoice the service will be £65.99 (inc VAT) rather than £59.99 (inc VAT). We expect to see many of the other low priced 20:1 contention 2Mbps services to follow, simply because many ISPs run with tight margins and are unable to absorb the £5 increase. Obviously those ISPs that are still charging over £100/month for the service are in a much better position to absorb the increase.
While a £5 rise seems scandalous, it must be weighed against the large price cuts in April when BT IPStream Office 2000's wholesale price dropped from £80/month to £38/month.
This increase was one of the measures BT Wholesale has taken to relieve some of the pressure from Oftel over Datastream market pricing, by increasing the IPStream 2Mbps service price, it leaves more of a margin for Datastream providers to undercut BT.