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Fluidata MD – Somebody Should Tell BT the Copper Phone Line is Dead

Saturday, May 17th, 2014 (8:09 am) - Score 1,756
piers daniell fluidata uk isp

The outspoken boss of business ISP Fluidata, Piers Daniell, has predicted that the latest generation of fibre optic (FTTP/H) broadband connectivity will steadily remove the need for consumer to be forced into paying for a copper-line Plain Old Telephone Service (POTS) on top of their Internet connectivity, but for BT it’s still too much of a “cashcow” to ignore.

In the modern broadband-equipped home your fixed phone line is more likely to sit there and remain unused, except for Internet connectivity of course. A survey conducted by ISPreview.co.uk last year unsurprisingly found that 62% of UK respondents prefer to make voice calls over their mobile and 64% said they’d get rid of the line altogether if it wasn’t needed for broadband (we’re still waiting for mass-market Naked ADSL lines).

By contrast most ultrafast fibre optic (FTTH/P) providers, ironically except BT’s own rival product where Fibre Voice Access (FVA) remains an M.I.A solution for consumers (not that this matters as only a very tiny number of people can get their FTTP), will only charge you for the broadband component. Admittedly you’re still paying rental for a line, be it copper or fibre, but here broadband really does mean broadband and not broadband + a copper line that you’ll almost never use for making calls on.

Piers Daniell, Fluidata’s Managing Director, said:

Surely with the advancement in speeds that FTTP affords the need for a phone line diminishes? With the likes of Skype offering land line style services, mobile phone companies offering millions of free minutes, home signal boosters and so forth the concept of having a POTS (plain old telephone service) becomes less important. Surely the customers who have FTTP and a phone line will be less than those who just choose the fibre? Lets ignore for a moment as to why a 100 year old technology, which has been paid for many times over, actually costs more than it did this time last year.

The problem is nobody has told BT, and through the actions of their retail department recently upping the cost of line rental to £15.99 it has allowed it to market even cheaper broadband services, that surprisingly have to run over it – creating a very important cashcow for the group.

Unfortunately FTTP doesn’t need a phone line. TalkTalk has taken a leaf out of BT’s book and currently offer the cheapest unlimited broadband deal in the UK, apparently, at £3.99 [£3.50] per month. Sounds good. Until you realise that it needs a £15.99 [£15.95] line rental to operate, so actually it is £19.98 [£19.45]. And with wholesale costs of phone lines at £10 per month it actually means the broadband component is £9.98. Ok still good value but surely this dubious marketing model shouldn’t make its way into the world of true fibre to the home?”

Daniell goes on to predict that a future fuelled by more competition from rival FTTP providers, which don’t also force you to pay for an old copper phone line alongside the new fibre one, will encourage BT to “focus on the future, rather than income streams of the past.”

But this will surely depend upon the availability of such services and at present the only ISPs with any FTTP/H ambitions, beyond fairly niche coverage, are Hyperoptic (here) and the joint CityFibre / TalkTalk / Sky Broadband deal (here). Hyperoptic has a firm target to reach 500,000 premises passed by 2018 in dense urban areas, while TalkTalk has spoken about an aspiration for 10 million but that’s yet to be proven and will in any case be a long time coming (let’s see what they can do with 20k in York first).

So for now and probably many more years to come, unless BT suddenly decides to take FTTH/P seriously (no signs of that happening – slower but faster to deploy hybrid-fibre solutions make more economic sense for their model), consumers will be stuck having to pay ever higher prices for copper line rental. A truly serious push into FTTP/H by Sky and TT might change that but it will first take time to prove.

Meanwhile we shouldn’t forget that Mobile Broadband connectivity is slowly becoming faster and more flexible thanks to 4G and future 5G connectivity. But few can ignore how most of the related tariffs include strict data caps and right now it would be very difficult for mobile operators, with their limited spectrum, to match fixed line capacity.

Never the less a user with basic Internet needs might pay just £10+ all-in for their calls, data and lots of txt’s. It won’t meet the demands of heavy users but we’re already seeing more and more mobile-only connected homes. Still, one often overlooked aspect of this is that several people in a home may have a separate contract, which can actually result in a much higher total bill than if a single fixed line were used. But of course you can’t take your fixed line broadband outside of the home, which you can do on a mobile.

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48 Responses
  1. Avatar FibreFred

    The “line” still needs to be paid for though even if its fibre, so yes you would save some money by not having a voice service but the line rental will still be a charge whether its a separate one or in the monthly package cost.

    • Interesting how the fibre ‘line rental’ doesn’t need to be paid for if you keep a copper line running next to it, Fred. The ‘line rental’ of the FTTP component mysteriously disappears if paying Openreach for what is a completely obsolete copper line.

      If there were actually a ‘line rental’ there it would be levied whether or not a copper service is being paid for, that copper line has costs too.

      The man has it spot on. The ‘transitional’ pricing is sweating the copper even where Openreach have deigned to invest in FTTP or been subsidised by the taxpayer to do so.

      FVA is cynically priced at approximately the same level as WLR to protect Openreach’s traditional voice revenues, and there is no option for a CP to not pay Openreach for FVA or WLR over copper with FTTP as they pay for it one way or the other.

      Once NGA does come onto the regulatory map both FTTC and FTTP will change substantially. FTTC isn’t even close to being VULA, there is no way for a CP to deliver VoNGA viably, the pricing won’t wash.

    • Avatar JNeuhoff

      Actually, according to the BT Business department, you can get a naked xDSL line, no need for a voice telephony package, for their business packages.

      Not that it matters in our case because BT isn’t able to provide suitable telecom services in our town anyway, so we don’t use this company.

    • Avatar FibreFred

      BT FTTP you mean? Not sure you can compare that really, better off comparing the monthly costs of FoD, that might not have a separate line rental charge but the charge will be in there in the monthly cost.

    • I’m pretty sure it’s fair to compare the cost of native FTTP with and without a separate copper line to the same premises.

      Unless there’s some magic that happens making FTTP cheaper to provide or more economically viable if copper line rental is being paid alongside it of course.

      FTTPoD is totally irrelevant to native GEA as it has baked into it additional costs. To say it’s more comparable to the transition pricing than a data only FTTP service seems crazy. It’s double the price of native 330/30 + FVA, WLR 3 or MPF; that’s one hell of a line rental added on.

    • Avatar FibreFred

      My point was that the small amount of native FTTP out there doesn’t reflect “the real” install/monthly costs does it?

      Isn’t it the same cost as FTTC?

    • Avatar Ignitionnet

      This is not relevant either. BT made the pricing decisions.

  2. Avatar Gadget

    Also would like to know how fibre-only deals with alarm systems, and if Sky set-top boxes can do without the modem connection, fax machines etc

  3. To be fair to BT, this really has little to do with them any more. There is nothing in the basic wholesale offer the other big providers use (LLU) that requires a phone service to be offered. And Piers, it costs less than £10 per month.

    I would have put the problem as lying with those muppets at the ASA who allow a very cheap product to be marketed (basic broadband) for a couple of pounds a month as-long-as you pay six times that much for the line it must run over. But then with the copper-can-be-sold-as-fibre fiasco, we all know how devoid from reality those guys are!

    There is also still the issue, I suspect, that the vast majority of customers actually still like the comfort of having a fixed telephone – even if they rarely use it in reality.

    Now that we provide a VoIP-based telephony service over our own Fixed Wireless Access broadband service, we can get an idea of how little the average useg makes calls these days – and it is not much at all. They do, however, still want the comfort of it being there.

    It was that comfort factor that finally made us provide our own VoIP service. Without it, our prices were compared with the £3 per month that TalkTalk and PlusNet charge. With it we can compare our “total” price to the “total” they must pay with the others.

  4. Avatar dragoneast

    Nice theories. I live in the populous south-east with good 3G and 4G mobile services FTTC and Fixed Wireless services. The landline voice phone is effectively 100% reliable, FTTC about 95% with the Fixed Wireless not far behind (but VOIP a bit less so since quality suffers from any significant contention on the network), mobile signals about 80% (for a smart meter it was deemed “too unreliable”). I’m not a worrier. But if you live alone, have kids or an elderly parent, you’re happy with going without connectivity in case of emergency 10% of the time. Right? Certainly it’s better than the human race coped with 40 or more years ago, and we didn’t become extinct. Though we might without FTTP/H, I suppose.

  5. Avatar No Clue

    Hardwire lines will be dead (consumer wise at least) within 10-15 years entirely so who cares.

  6. Avatar robert scriven

    The line rental keeps going up though, its getting really steep these days, id like my line to be all copper, instead of a long bit of a shocking quality aluminium.

    • Avatar FibreFred

      Going up is the usual direction for most things sadly

    • What is somewhat amusing though is that neither the basic LLU charge or indeed the broadband fee seem to go up – just the retail line rental charge and the standard per minute phone charges.

      I suppose there are many ways to charge for the broadband service – with only one of them called broadband! 🙂

  7. Avatar hmmm

    ripoff line rental a tax for something you don’t want and they try to say its cheap pfft cheap my ass but that’s the shit government and the no brain Ofcom thick shits

    • Avatar FibreFred

      So if you don’t want a line why bother buying the service , go mobile?

    • Don’t be so pithy, Fred.

      I have to pay 2 sets of line rental for 2 lines, I couldn’t care less about the bit between cabinet and exchange, I don’t want it, but Openreach still force CPs to pay for it.

      It’s ridiculous. You’d think they’d be happy to be rid of the maintenance of that section and offer VoNGA. With FTTP they price specifically to prevent CPs offering it and they don’t offer a viable SLU product – copper rental for a d-side is pretty much the same as a full loop.

    • Avatar FibreFred

      If you get rid of line rental how do openreach get paid ?

    • The same way Bell Canada do for dry copper loops. There is a loop rental component but it’s lower than a line with telco on it.

      For FTTP last I checked they aren’t supplying it for free, it’s an active wholesale product.

      For FTTC a combination of the above; a considerably reduced copper line price for a d-side only, the price for the active FTTC component, and where applicable a charge for FVA.

      Given they’re supposedly embracing the future and call TalkTalk copper philistines, etc, that they seem to rely on it for a considerable part of their ‘NGA’ revenue is ridiculous.

    • Avatar FibreFred

      So still a charge then? Just … less

      Unless you are paying for the physical line itself to own it end 2 end and the maintenance i.e. you pay to repair if it breaks – as in you own it , you pay to fix it, there has to be a rental charge of sorts to cover that cost?

      As I said originally the line has to be paid for, is it too much at the moment? its not for me to say but you cannot simply scrap it as the outspoken boss calls for.

    • The outspoken boss is talking about FTTP not copper.

      I entirely agree that with copper based services a small amount of line rental is appropriate, however I vehemently disagree that a line rental should be required for FTTP when Openreach are delivering an active service with it, or that it’s acceptable that a line rental is needed on FTTP unless you keep an obsolete copper line in use in which case it magically disappears.

      I also entirely disagree that I or anyone else should have to pay for a copper loop back to the exchange to receive FTTC. I neither need nor want e-sides and CPs should have the option to order FTTC without needing to pay WLR3 / MPF charges in full.

      Ofcom have really screwed the UK market up and having plain copper LLU running alongside active NGA products is the worst of everything.

      I am annoyed enough that I have to pay an absurd amount of money bonding 2 lines for speeds that still don’t touch a Virgin Media user because I’m in an Openreach monopoly area, let alone that a considerable proportion of those costs are going to 2 e-sides that I couldn’t give a flying about and don’t use because Openreach are addicted to copper line rental.

      Fred – I know you’re a fan of what Openreach are doing but looking across the Channel at just one example in a far more hostile environment than ours:

      Swisscom spent nearly as much on CapEx serving the population of Switzerland alongside a small part of Italy purely on NGA in 2012-2013 alone as Openreach have spent on their entire commercial NGA rollout in CapEx up to 2013.

      Swisscom offer LLU and it’s been well taken up. They are not a fully vertically integrated monopoly like a Verizon or an AT&T.

      They continue to build FTTP in urban and suburban conurbations and FTTS, not FTTCurb/Cabinet but FTTStreet, basically FTTDP, in market towns and rural areas. Their FTTP deployment is 4 x point to point fibres in anticipation of service level and fully unbundled products. They have active hardware deep into their network where they don’t have FTTP ready for G.Fast.

      Customers who take their FTTP data products but don’t take their FVA/telco aren’t charged more for their data, they are charged less as they should be – they are after all taking fewer services!

      That Openreach are/have been building FTTC in London, Birmingham, Leeds, Manchester, Edinburgh, Glasgow, etc, is a joke. Thanks to that joke they are going to spend a 9 figure sum powering active hardware out in the field for however many years.

      Over 1/3rd of the 2.5 billion figure Openreach quote is OpEx. Costs not incurred building the network but the electricity and monitoring bills for all those cabinets along with putting VDSL cards into them.

      The thing Openreach have done extremely well is spend as little as possible. I seriously doubt you’d find any other incumbent telco anywhere in Europe that’s spent so little per head on CapEx for NGA relative to their local economy.

      This is the same telco that was anticipating spending 10 billion on 21CN. That 10 billion would have most certainly funded FTTP to our major and medium population and business centres alongside a substantial deployment of FTTC with tactical FTTP deployment in other areas.

      That they can claim they’ve spent 2.5 billion to politicians and the public with a straight face while informing analysts and investors of what they’ve actually spent on CapEx, that thing you’d assume is the actual investment is pretty special.

      Could be worse though; could have had the CEO of Openreach claiming that, having spent ~1.3 billion on CapEx building out to over 25,000 cabinets in over a thousand exchanges, it was costing them a million per exchange and then 100k per cabinet on top.

      That would’ve been embarrassing.

    • Avatar FibreFred

      Thanks ignition I understand what you are saying now, so with respect to not paying the full amount from the fttc cab to the exchange are you saying that is because that fibre stretch is a shared medium rather than in the old world it was a physical pair of copper cables all the way back to the exchange ? If so I think what you are saying is totally fair

      My point was and still is regardless of whether its copper or fibre if you are using someone’s else’s owned infrastructure you will have to pay “something” to use it, thanks for the overseas examples I like to see those especially ones that work

    • Fred,

      My point is that the active products Openreach offer should have any ‘line rental’ element baked into them.

      Passive products of course Openreach have to charge a line rental. They have no other way to make money from them.

      The manner in which FTTP is sold is problematic. Either Openreach are charging too much for line rental or are charging too much for FTTP without telco. Fred – if you don’t take telco with FTTP you are charged the same as with. Something is subsidising something else there, and given the costs involved with FTTP you can only assume that the copper line is subsidising the FTTP, indicating that copper line rental, a regulated product, is excessively profitable.

      FVA clearly is excessively priced. It’s absurd to charge the same for a voice VLAN as for WLR3. Openreach *are* either overcharging for data-only FTTP or overcharging for FVA, or making too much profit out of copper line rental. They can’t magic away part of the price for FTTP in return for taking a regulated price copper service and this is going to stop when the regulatory holiday on NGA is over.

      Another thing that bothers me is the requirement to take a full copper loop for FTTC. This is unnecessary and restricts consumer choice. I don’t want to take a copper loop, I don’t care, raise CP rental for FTTC to take account of the d-side and let them offer VoNGA.

      Openreach’s current pricing model consists of boosting profits by forcing a full copper loop whether the CP wants it or not, or forcing the CP to pay an absurd price for a voice VLAN. This has no place in a next generation access network and no place in a regulated telco’s price list.

  8. Avatar Sledgehammer

    Line Rental should NEVER have been allowed. It should have been all on call charges, pay for what you use. The GPO when we first had a telephone all you paid for were calls made, nothing else.

    • Avatar X66yh

      When was that then?

      I have a bill on file from October 1956
      PO telephones – Guilford area
      Rental charges for the quarter were £1 17s 6d

      The bill was submitted half yearly with a charge being made for the previous quarter just gone and in advance for the next quarter to come.
      Trunk call and local calls were itemised below the rental charge

    • Avatar hmmm

      exactly sledgehammer its just another way of coining it in and fred you must like paying for the line rental wouldn’t go to mobile anyway that’s crap also like fttc suppose to get superfast speeds In my case superslow .

    • Avatar TheFacts

      Just like the standing charges from the power companies.

    • Avatar No Clue

      Idiot logic again…..
      Nothing at all like a standing charge from a power company. For a start that contributes towards emergency’s and safety. A Gas can leak and be a danger and need immediate repair. A phone line that breaks though is hardly a danger. BT also have been known (i can point to atleast 2 stories on here) to take over a month to fix a phone line, i doubt you would wait a month for a broken gas main to be fixed.

    • Avatar TheFacts

      Do VM offer a phone line with no rental?

    • Avatar No Clue

      No they go one better than that they let you have internet without POTS.

    • Avatar Raindrops

      And getting Fibre from Virgin is cheaper than getting Fibre from BT due to BTs COMPULSORY line rental as i have pointed out to him before…
      http://www.ispreview.co.uk/index.php/2014/04/bt-vs-talktalk-battle-uk-fibre-broadband-cost-result-gbp2-cut.html#comment-142961

  9. Avatar Sledgehammer

    X66yh I stand corrected, after a long trawl I found this.

    1951

    A Telephone Act became law in August which enabled the Postmaster-General to set rental charges

    and so forth by statutory regulation. The passing of the Act was the first recognition in law

    of the telephone as a separate instrument from the telegraph. It was also the first Telephone

    Act passed by Parliament, 75 years after the invention of the telephone.

  10. Avatar Sledgehammer

    If anyone wants to read the full article

    http://www.britishtelephones.com/histuk.htm

    • Avatar FibreFred

      Thanks

      I don’t really see the problem, its their line and you rent it until you are done with it, it has to be paid for somehow.

  11. Avatar fastman2

    Ignition the £2.5bn has been spend – (that will have been a sum of money set aside for the project – not all of that will be capex – you have to fund the people the deployment and the capex (kit) all of that would need to come from the project costs. any corporate setting aside project costs would need to include both the physical costs and deployement and delivery and management of deploying and supporting that project in life (That standard economic) FYIi think its next excess of 45,000 street boxes which have been deployed (using the 2.5bn)- as you know your were a beneficiary of that commercial project (evenutually) due to your engagement / campaigh – and you havd had a senior level of engagement than most others around the commercial programme and 2.5bn —

    • Sorry Fastman I don’t really get what you’re saying. On the one hand you’re saying the 2.5 billion has been spent, on the other you’re discussing supporting the project in life.

      I don’t disagree, because I can’t, that it will come up to 2.5 billion, I’m just saying that that isn’t the figure that’s gone into CapEx.

      I’m aware I had a more senior level of engagement then most, doesn’t stop me from feeling frustrated that given I and the community delivered a very high level of takeup, we may be going through the same rigmarole of lack of demand / commercial viability when the next set of upgrades come up.

      The Openreach deployment has been weird. Rather than focusing on takeup you guys have deployed to cabinets that have hardly sold anything while turning your noses up at some cabinets, or making life difficult, on others.

      This cabinet has ~50% take up of NGA. It should not have had FTTC deployed. You guys are watching the last ports on the 288 port Huawei get bought then you face deploying another cabinet. I promised this level of take up, and through my own and the community’s effors delivered.

      For all your arguments you guys are more interested in delivering dividends now and putting off costs until later. You are doing the bare minimum to deliver NGA services, collecting taxpayer subsidies to help pay down some of the pension deficit, and are doing your utmost to continue drawing copper revenue in lieu of a serious NGA replacement programme.

      I’m not going to judge you guys beyond saying that I think you are wrong. You are more than welcome to argue with me or not, doesn’t change that, unlike many areas in your commercial deployment, this one that I had to spend 10 months arguing the toss with you to get you to deploy will be delivering you profit way before many areas you deployed without a second thought, and longer term you will have wasted your money deploying FTTC here rather than going straight to FTTP.

      You urinated away various amounts of cash deploying to cabinets that have hardly sold anything because they were cheap rather than focusing on cabinets where demand would be high. This is for me a combination of a failure on the part of your commerical modeling and a desire to draw BDUK subsidy.

      Feel free to disagree and to back it up with facts. Mine are that you are facing deploying a second DSLAM, then deploying G.Fast, then going to FTTP in an area that is perhaps 50% LLU, when you could have deployed FTTP and pulled in revenue both from broadband upgrades and those taking BT Wholesale based services and dropping LLU.

      My last point is that the 1 million per exchange and 100k per cabinet on top figures bandied around by senior Openreach people are clearly not the case and you just emphasised it out with your figures mentioning 2.5 billion CapEx and OpEx delivering over 45,000 FTTC cabinets.

      Regardless, yes this cabinet had quite high level intervention, and will be delivering profit 5 years before most. Not bad for a cabinet that wasn’t commercially viable and probably well worth the high level attention.

    • Avatar JNeuhoff

      @Ignitionnet: I don’t know your whole story, but why haven’t you campaigned for an alternative telecom provider to deploy some better up-to-date FTTP? With such a high takeup level it wouldn’t have been too hard.

    • This is a relatively new housing estate, indeed bits are just now being finished, so extremely problematic for anyone bar Openreach to work in, JN.

      Virgin Media declined, an altnet I won’t name declined, CityFibre have nothing nearby.

      The only option open now, really, would be for the CityFibre / TalkTalk / Sky consortium to come to play, which would require some work on the part of the local council…. who I’ve already pointed in the direction of York and that parts of York will, next year, have the choice of Virgin Media or 2 fibre to the premises operators.

  12. Avatar fastman2

    th inlife is outside of the 2.5bn

    • Thanks for responding, however if that is the case your executives have been lying to investors in conference calls and, also somewhat less seriously given that that is a jail time offence and this isn’t, to this website.

      http://www.ispreview.co.uk/index.php/2014/02/bt-denies-underspend-gbp2-5bn-uk-gea-fibre-broadband-rollout.html

      ‘But a BT spokesperson told ISPreview.co.uk that their total investment actually comprises of capex, opex (operating costs) and £500m of spend which “was built into our original plans“’

      OpEx is, by definition, ‘in life’ and was specifically mentioned as part of the 2.5bln. Also I see that 20% of the 2.5bln was cash that was going to be spent on other things anyway. So with that in mind the actual dedicated, additional CapEx and OpEx spend on NGA is only 2bln, and of that 2bln only 1.2-1.6bln CapEx.

      This isn’t something to be worried about; Swisscom wasted 1.2 billion in a single year on NGA, BT have passed 2/3rds of the country for not much more which is, for the investors who own the company, excellent work.

      Openreach have done an incredible job reaching so many homes for so relatively little. It’s a great example of just how cheap overbuild can be and compares well to Virgin Media’s 2012 and 2013 total CapEx spend on scalable infrastructure, network upgrade and rebuild of 43.76 per premises passed on an existing hybrid network.

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