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ISPs Vent Anger - BT ADSL Price Rise

Posted: 06th Aug, 2004 By: MarkJ
Our sources (Entanet) have just reported on the outcome of a recent conference call between several major UK ISP's and BT regarding the recent ADSL price hike. It would appear as if BT is blaming Ofcom, although providers were having none of it.

Many of the providers were very angry with BT's IPStream ADSL Office product price increases. Some felt that BT were using it as a means to force smaller ISP's off the 'Standard' tariff and onto their new CBC (Capacity Based Charging) platform, which was unaffected.

"BT claim that there are over 10 ISPs already on CBC, which represents 90% of the new connections of the old IPStream."

The providers point towards BT's claims that the "Standard price would not change, 3 days before the announcement that Office products would have a price rise."

It's also noted that, in the past "when OFCOM applied pressure to BT to unbundle the exchanges (from complaints by AOL, WorldCom, etc.) and BT fought and argued with OFCOM for over 18 months before BT conceded.

This time round, BT has done nothing to fight price increases, but instead rubbed their hands in glee, with the amount of extra money BT will make, i.e. profiteering.

Also in light of price reductions for DataStream customers (unsure of the details), BT would try to recoup the margin from IPStream. BT claim the reason for their initiative in this case is that they believe this price increase is inevitable.

So what of the Ofcom involvement? Well BT "initially cited the rationale for the price increase [as being] due to OFCOM applying pressure on BT. It transpired that OFCOM had released a 'test' called the "Margin-Squeeze Test" on their website on the 27th May.

BT's anti-competitive lawyers and financial decided that the IPStream Office products would fail the test, and therefore raised the prices. Farcically, under pressure from the Q&A session that OFCOM did not apply any direct pressure for the price increase, and that BT had taken its own initiative to raise the prices.

It's noted that BT must give OFCOM a MINIMUM of 28 days notice regarding any price increases, although the regulator can not stop the increases unless they decide BT are in breach (which they have not done yet).

Some providers felt that "The lateness of the notification of this price increase could either be a sign of incompetence and disorganisation with BT (BT knew about this a week from 27th May) or a sign of conspiracy against small and medium ISPs on IPStream, and raises serious concerns over whether BT value standard pricing
IPStream customers anymore.

Unsurprisingly the ISP's have now urged "BT to withdraw the price increase until UBC pricing has been finalised. ISPs also urge all ISPs to speak to the ISPA for further support against the decision by BT, and to further clarify the rules from OFCOM."
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