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Entanet Absorbs BT's New ADSL Cessation Charge

Posted: 06th Apr, 2007 By: MarkJ
In response to news that BT Wholesale is introducing a £33.75 (excl VAT) cease charge on broadband end users from 1 May 2007 (here), Entanet has announced that it will be absorbing the cost to protect its channel partners’ interests:

BT Wholesale announced several changes to its pricing model for ISPs that use the Capacity Based Charging model (as Entanet does) and Usage Based Charging model, including a small reduction in activation fees. However, Entanet believes the introduction of such a charge for ceases could adversely affect its Partners, who would likely have no option but to pass on the cost to their customers. Entanet sees this as a negative differentiator for virtual ISPs who are already facing stiff competition from alternative service providers.

Commenting on Entanet’s decision, Business Development Manager for Broadband, Carol Davies said: “We decided rather than reduce our pricing for new activations and apply the cease charge to connections; we would maintain our current pricing model and absorb the new cease charge.”

Davies explained the detail behind the decision further: “On the face of it, BT Wholesale has reduced the cost per tail by £0.77/month. However, it has also introduced a new £0.63/month charge for bandwidth usage per tail. Consequently the net fall in cost to Entanet is just £0.14/month. We have decided that, by keeping our prices for existing and new connections at the current level, we will use this gain to invest in our network in preparation for 21CN. This cost is significant but represents a major strategic priority for Entanet in the forthcoming year. It will create a competitive platform for Partners and ultimately deliver tangible benefit to their end user customers.”

The news is largely what we expected to happen, although BT's reductions can be applied differently to other providers and so all may not follow suit. It’s fair to say that BT’s recent price adjustments were more of an overall balancing act than an outright cut.
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