Is UK ADSL having its style cramped?
LightReading.com has run an item suggesting that service providers are testing customers' patience by cramming people onto their networks. The reason for this happening is given as the introduction of the Capacity Based Charging and Usage Based Charging models by BT Wholesale in the last two year (April 2004.
Richard Thomas, CEO of Net Evidence (SLM) Ltd, points out the price of a 155Mbps BT Central rose from £40,000 to £316,000 per year but does not mention that the price of the actual ADSL monthly line rental will have dropped from £38 to £8.40 for a Home 2000 line, from £23 to £8.40 for a 1Mbps line and £13 to £8.40 for a 0.5Mbps line. Doing a few quick sums based on the potential for 8,000 sessions on a 155Mbps BT Central using CBC it would cost the ISP £1,122,400 per year. Under the old standard pricing mechanism the cost would vary according the line speeds but lets assume a mix of line speeds as follows 60% at 2Mbps, 25% at 1Mbps and 15% at 0.5Mbps - the price then is £2,968,000. Which at face value suggests ISP's are a lot better off. If a provider has solely 0.5Mbps customers, the sums work out to £1,288,000.
So why are the ISP's not better off, well several things, one is the rapid drop in the retail prices, which in turn has boosted the take up of ADSL in the UK, but significantly reduced the margins available on each line. Also if you populated a BT Central with the ratio of users we have suggested a contention ratio of 78:1 would result - and not be very pleasant at all. Prior to 2004, when CBC was just a very small dot on the horizon, most end-users had a relatively simple 0.5Mbps connection, which meant you could fit 8,000 users on a single 155Mbps BT Central potentially (there are other considerations like whether the hardware on the BT Central can cope with 8,000 user sessions, which in the past has seen providers running with around 4,000 sessions per BT Central). Some creative providers, may even consider the fact that while it may have 10,000 customers, it has only ever seen 7000 online at once, and plan its capacity accordingly, under the capacity based charging model this offers large savings.
So are we seeing users crammed onto networks and performance suffering? It is hard to be definitive because the way we all use our broadband has altered since 2003, plus many of us are running a much faster connection. The feeling is that while people very often got close to the best possible speed out of their 0.5Mbps connection in 2003, with many on 2Mbps we are running faster, but not seeing four times the speed always. Certainly various fair use policies are now in place on a wide number of service providers, and probably even more are running some type of traffic management to keep services like web browsing running smoothly. In fact the number of providers selling what could be termed a 'clean' connection with a fixed price to the consumer market is dwindling fast. Perhaps it is time for a provider somewhere to create a simple unlimited 0.5Mbps or 1Mbps service with something like 2003 prices to give the 'power' user an option in the market.
So why has the UK got itself into the position it is now? Well for faster ADSL services to have ever taken off in the UK, BT had to re-jig the pricing model somehow - the Margin Squeeze Test was keeping the cost of 2Mbps connections too high for the residential market. Another factor is that people with broadband connections are spending longer online, plus using technologies like Voice over IP and Video over broadband services, which means higher utilisation at peak times.
The future? Well it seems a lot is pinned on local loop unbundling during 2006, which should allow providers a lot more leeway in terms of line speeds and also free them from the constraints of BT with respect to the backhaul networks.