"Up to" Charges for "Up to" Services

I’m not sure who these wispa folks are, but they raise a similar point to one that I’ve been making lately to whoever will listen:

If your supermarket charged you full price for ‘upto’ a Kg of sugar, or the service station charged you full price for ‘upto’ a gallon of petrol they would be prosecuted.

(via The Register)

We pay for an “up to 16Mbps” service. Unfortunately my ISP - BT Total Broadband - and the underlying wholesale provider Openreach have not seen fit to install ADSL2 hardware in our local exchange. This mere technicality means that my “up to 16Mbps” service is instantly constrained by the 8Mbps limit on ADSL Max technology.

We pay £26 a month for a service that, through no fault of our own, can only deliver 50% of the promised1 service. That’s bad enough, but we’re still talking theoretical limits here. Our actual delivered service is just over 6Mbps with a fair wind. So what we actually get is not 16Mbps, but just 37.5% of that. Other BT Total Broadband customers on the same package will pay the same amount, yet they may get 100% of the promised service.

We actually fall somewhere in the middle of the spectrum. A good friend is also a customer with BT Total Broadband, and therefore is also signed up to a service that is advertised as being up to 16Mbps. His actual delivered service is 0.5Mbps. To save you doing the mental arithmetic, that is just 3.125% of the maximum theoretical service. Yet he pays 100% of the price.

Back in 2009 the UK government said in their budget that they would commit to ensuring that everyone in the country would have access to 2Mbps broadband by 2012 though they’ve now said that will be 2015. We still have people unable to achieve that target. Worse still, these people are being forced to pay prices similar to those paid by users of next-generation broadband services.

Not going far enough

I not only agree with what wispa are saying in their campaign, but I feel that they are not going far enough. Not only should people be paying a price proportionate to the service they receive, but those receiving a service below the governments “target” of 2Mbps should not be paying a single penny. And yet the campaign from wispa only covers the concept of people not getting the full “up to” service.

There is an even wider problem that is becoming more prevalent as next-generation broadband services are being rolled out. Amongst my friends, family and colleagues there is a huge disparity amongst the level of broadband services available. Some people have Fibre To The Cabinet, some have ADSL2, some have just regular ADSL, some have 3G wireless, and some have nothing.

The strange thing is that many of these differing levels of service cost around the same price. As an example, at home we only receive regular ADSL - this will cost about £18 a month for up to 16Mbps and 40GB allowance2. According to BT’s Infinity product pages the base level package is also £18, but this includes up to 38Mbps and the same 40GB allowance.

We pay the same price for an inferior service. Why? Because we live in an area that is simply not covered by the FTTC technology. That seems unfair to say the least, yet when the question is asked of BT, their answer is often the same: it comes down to the business case. They will simply not extend the reach of their FTTC offering because it is cost prohibitive.

Who costs the most?

Let’s think about this for a minute. While I accept that I am probably simplifying things greatly here, the costs to BT for each customer will come down to the several major groupings: ISP running costs, bandwidth, network infrastructure, and exchange hardware. So how might these costs vary between users on ADSL and Infinity products?

  • It will cost the same to run as an ISP whether your user is on ADSL or Infinity. The cost of an email accounts, support, portals, etc should all be the same. If anything support for Infinity users will be higher as this is the newer technology, and more prone to confusion and problems.

  • Bandwidth costs should be the same to them although it could easily be argued that a user on a fast Infinity connection will consume more of your bandwidth, certainly on “unlimited” allowance packages.

  • Network infrastructure is where things will differ. Backhaul should be the same, but paying for new fibre cabinets and the fibre optic cabling to them costs a lot. The network infrastructure is the same as it always was for ADSL users, it’s only the new Infinity users that incur this cost.

  • Exchange hardware will also see a large difference. ADSL hardware is available in most, if not all exchanges, and would likely have been paid for at this stage, less some ongoing maintenance costs. Conversely, the Infinity hardware is new and expensive, and is where the real cost lies.

I think it’s fair to say that it costs a lot more to sustain a customer on an Infinity package over a customer on regular ADSL, yet both sets of customers pay the same price. I think that what wispa should be campaigning for is not only an end to the “up to” problem, but that customers on older, inferior products should not be effectively subsidising customers who take a newer, superior product.

As I mentioned earlier, often when I ask BT why they don’t offer me Infinity, they say it’s because there is no business case for it. They say it’s not economically viable.

I now say - why don’t you use the excess money you get from me paying the same price as an Infinity service, and instead of treating it as profit, treat it as a down-payment on the new hardware you need to provide me with a better service. Maybe wispa can adapt this into their campaign as well.

  1. Yes, I know it wasn’t actually promised to us, but this is where the whole “you wouldn’t be happy with up to a litre of fuel” thing comes in!

  2. We were on this package, but upgraded to their “unlimited” allowance, hence the £26 a month mentioned previously.