Category: Regulation

UKIF (UK Internet Federation), a group of service providers convened as a result of the recent BT Wholesale price rises of up to 32.6% taking effect from September has spoken out against Ofcom's lack of respect for business models of smaller providers This morning, Ofcom published its Direction statement setting out a Margin Squeeze test to compare BT Wholesale's IPStream and DataStream services which 'hand over' the user sessions in different parts of the network. Ofcom's role as regulator is to ensure BT does not abuse its dominant market position for example by supporting its own IPStream services over similar services provided by DataStream operators who take the session from BT at an earlier level in the network.

A significant number of small-to-medium sized ISPs have expressed their dissatisfaction at Ofcom's consultation process with respect to the proposed margin squeeze test that is has been using to calculate margins which BT claims left them with no option but to increase prices of the higher end IPStream Office services and among others. A group of ISPs met with Ofcom last Friday to bring their urgent concerns to the table but left feeling their comments would not make a difference.

ZDNet are reporting that ISPA is to meet Ofcom on Friday to discuss the recently announced price rises by BT Wholesale.

A week ago, BT Wholesale announced it will be increasing its IPStream Office and IPStream S-series prices in response to regulatory pressure. The 'margin squeeze' test has been blamed for the huge price increases that will cripple some smaller business-focussed providers who received only 28 days' notice of the increases as high as 32.6% taking place at the beginning of September. This will hit those ISPs who have one year or longer contracts with customers very hard, although even those with monthly contracts object to the notice period which causes many to run at a loss until they can pass on the costs to the end users.