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ISP's switch back to CBC rather than UBC for BT centrals?

ipdialup
Grafter
Posts: 25
Registered: 30-07-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Hi all,

It's something i've been thinking about for a while and was wondering what the rest of the community is thinking, I remember back in the days before BT whacked the price of Connection Based Charging (for it's ADSL Centrals) through the roof and then introduced Usage Based Charging... at that point moreless all ISP's had BT centrals based on the CBC model.

At that point all ISP's jumped on UBC as it appeared to offer them a better deal, now bear with me here, but from the R & D i've done I feel the usage model is where all the problems for all ISP's providing cheap ADSL services has come from..

ADSL is made up of 2 discrete costs.

The cost of the port in the exchange

£8.40 for a 50:1 line upto 8mb down 448kbit up
£12.40 for a 20:1 line upto 8mb down 832kbit up.

So a chunk of the money has to go their.

The next is the cost of the terminating point i.e. BT Central, now two options exist here, one a Connection Based Charge per year (CBC), allowing upto 32,000 connections for a nice figure of approx £1.475million or a Usage Based Charge (UBC) of approx £160,000 per year + bandwidth costs (more detail to follow)

I'm imformed that the BT Central can't actually operate at peak saturation, so for my figures i'm going to work on a 50% and later 25% saturation (not sure if that's realistic plusnet care to comment?)

So let's now do some figures...

Say we have a saturation on the CBC central of 50% 16,000 users (not sure if that's realistc if anybody from plusnet can comment??) that gives each user approx 38kbit's of bandwidth if they were all using it at the same time (highly unlikley?).

To Support the cost of just the central alone it would be

1,475,000 / 16000 / 12 = £7.70 per month per user.

Plus the port costs would give a cost figure in the range of £16.10 -> £20.10 depending on the product they were on.

Now an ISP has to make a mark on this, to pay staff, invest in new kit, etc.. etc.. and make a profit.

So if the ISP needs to make £10 per user per month this would give a price range to the consumer of £26.10 -> £30.10 for a garunteed 38kbit's a month... not great, but all costs in this are fixed, if you were to reduced the number of users on the Central to say 8,000 which would give each one a garunteed 77kbits of bandwidth if they all used their conections at the same time this would work out approx
£33 -> £37 a month to charge the end user.

Things are heading in the direction that start's to be too expensive for most consumers to stomach. I'd be happy to pay upwards of £40's a month if I could be on a System which uses CBC based preovisioning and had say a limit of 6000 connections, but that's me and not the general public ;-)

So the other option comes into play usage based charging, the fixed costs for this say for 8000 users are as follows.

£160,000 / 8000 / 12 = £1.67 per user / mnth

For 16000 users £0.83 per user / month

For 32000 users £0.42 per user / month

Add on port costs gives a price range before bandwidth costs of £8.82 -> £14.07 dependant on how fully saturated the central is.

Now bandwidth on a 622mbit central costs around £200 per Mbit/s per month. so if your central is fully loaded that's
£124400 a month divide by say 8000 users £15 per user per user per month if they are using their continuous 77kbit's a secc.

This raises some eye brows in itself, as even if the central is fully populated it's gonna be tricky to make any money when your charging the consumer £9.99 a month or even £14.99 a month. The only way to do it would be to assume a large portion of your users are idle so not costing anything over and above your fixed costs.

Now i'm not sure if any discounts etc.. are provided by BT wholesale, but you can see from these calculations that trying to provide a service on UBC, mean's that you have to seriously regulate the amount of bandwidth people can use otherwise you'll loose money on every customer, and eventually go out of business.

For me I think ISP's should ditch the UBC model and go back to CBC charging, or at least have a product that offers this approach so yes it will cost the consumer more, but you will start getting a service that works even at peak times.

The whole UBC model, on paper suggests a cheaper option for the consumer, but does mean that usage has to be restricted otherwise money is lost per user..

This I think explains why usage caps have appeared and bandwidth throttling takes place etc.. it has to using a UBC model otherwise an ISP cannot make money simple as that.

That's my two pence worth, let me know what you think or if you feel my figures are flawed.

Cheers,

Andy
14 REPLIES
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ISP's switch back to CBC rather than UBC for BT centrals?

That's a very interesting post. It's also interesting to see that the 50:1 vs 20:1 products are only £4 different (in port costs)...

I also agree with your conclusion regarding seriously regulating traffic. I also agree that if a CBC product was offered it would be far more up my avenue. It would also be less dependent on the whole "average use" excuse that PN trot out ad infinitum regarding the viability of every product they offer.
Plusnet Staff
Plusnet Staff
Posts: 12,169
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Registered: 04-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Hi,

The current charging method that most ISPs use is CBC (Capacity Based Charging). UBC is available as an option, but not many, if any ISPs actually use it because it works out more expensive under most scenarios.

The old charging before CBC was the standard charging method. Here you pay a lot less for the BT centrals (£160,000 per 622Mbps pipe) but you paid a lot more for the port costs.

512kps is £156 per year, 1Mbps £276 per year and 2Mbps £456 per year.

Max isn't available under standard charging.

So for 200,000 customers and 4 centrals under standard charging (assuming everyone is on 2Mbps) the cost per year is

200,000 x 456 + 4 x 160,000 = £91,840,000

if they were all on 512kbps then the cost would be

200,000 x 156 + 4 x 160,000 = £31,840,000

Yet on CBC the cost is

200,000 x 8.40 x 12 + 4 x 1,496,760 = £26,147,040

plus you have the availability of Max.

Quote
I'm imformed that the BT Central can't actually operate at peak saturation, so for my figures i'm going to work on a 50% and later 25% saturation (not sure if that's realistic plusnet care to comment?)


A central can connect up to 32,000 customers without a problem, the problem is that without traffic management when you approach 90% utilisation of the bandwidth you'll start to see ping spikes and packet loss across all types of customers and all types of usage. Push past 95% and most customers are affected. However with traffic management in place on the network you can control what type of traffic is affected. So on our network we can push the bandwidth utilisation to 100% and so long as the network is balanced it should only see bronze and maybe a small amount of silver dropped.

Quote
Say we have a saturation on the CBC central of 50% 16,000 users (not sure if that's realistc if anybody from plusnet can comment?Huh


At peak time it would be a lot higher than that, probably over 30,000.

Quote
So if the ISP needs to make £10 per user per month this would give a price


Profit margins are nearer £1 per month than £10.

Quote
Things are heading in the direction that start's to be too expensive for most consumers to stomach. I'd be happy to pay upwards of £40's a month if I could be on a System which uses CBC based preovisioning and had say a limit of 6000 connections, but that's me and not the general public


And there lies the key point, why would people pay £40 when they could (insert any fee between zero and £39.99)? I'm sure that there are lots of people who would (we offer a £39.99 Premier account for one). So I pose the question, would a PAYG style account be suitable?

At current pricing a PAYG account at £40.49 per month would offer 36GB pre-paid top priority bandwidth and free overnight usage. Or you can post pay and get 30GB or some combination in between. How would this suit you? The post-pay model means that you don't pay for the usage if you don't use it so if you don't use the connection as much one month you pay less.

With the way the traffic management is designed it doesn't really matter in this case how many people are connected to the central and what the utiisation is because the amount of bandwidth allocated is built based on the customer numbers and what they are using and the priority gives that usage top priority.
ipdialup
Grafter
Posts: 25
Registered: 30-07-2007

ISP's switch back to CBC rather than UBC for BT centrals?

That's interesting, didn't realise you use CBC based centrals, that ruins my theories :-) , if that's the case things don't quite add up though, especially with the usage levels you are saying you regulally operate at during peak times... 30000+ per central.

Assume each user has the expensive port (all figures per month)

£12.40 (20:1 8mb down / 832k up)

CBC Charge of £1,475,000 pa / 30000 / 12 = £4.09

Net cost per user for most expensive product = £16.49p.

Now I pay £31.99 for a 20:1 port and 13GB a month peak and unlimited off peak (but always with what appears to be traffic shaping at all times).

Obviously everybody isn't paying the same figure as me so maybe you make more money from me than others?

What I'd like to see is the availability of a service that doesn't have the traffic shaping at all, and to achieve a reasonable level of usage for all customers doesn't allow more than 5000 connections per BT central.

It seems something like this should be possible in theory at least.... i.e. rather than loads the centrals to their max connections and then traffic shape to prevent ping spikes / packet loss, remove the traffic shapping but reduce the number of people per central?

Cost wise it would work out something like.. assuming everybody was on 20:1 8mb / 832kbps..

£12.40 + (£1,475,000 / 5000 / 12) = £37 a month.

plus net chuck on some profit etc.. and your not far away from the £40-£45 a month, and no need to traffic shapping at all..

Maybe it's a product like this that plus net should investigate? Maybe it's not feasable? Maybe with even 5000 users on the central it would still suffer from packet loss and congestion without traffic shaping, but I'm sure you could figure out a number of connections for a certain price that would mean you could throw away the traffic shaping software for good? What ever that figure might be, perhaps it would make the per user cost to high for the market, but from what I'm seeing people would be prepared to pay for a non-traffic shapped service, and pay a premium for it?

Thanks for your response though adds more fuel to the fire of thought on this subject.

Cheers,


Andy.
Superuser
Superuser
Posts: 2,484
Thanks: 190
Fixes: 5
Registered: 06-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Problem with that one is it would only take 70 odd (I think! Maths done quickly in my head) to max out the central at 8mb, the pipe would hit its limits and packets would be dropped.

Phil
lank111
Grafter
Posts: 215
Registered: 11-10-2007

ISP's switch back to CBC rather than UBC for BT centrals?

So, as im paying £21.99 a month to use a upto 30Gig peak time, but as i use upto 3gig, could i get a substantal discount?

you will prob say, down grade to BB+ package as this would be suitable for my needs.

my answer, No chance as BB+ has more Issues then premier and want a service that i could use without having issues.

Just a note, How long would it take to change my account,
Say to Test, BB+ and if i didnt like it change back to premier.

Yet i would still be paying the full fee...

Maybe i sould start selling my bandwidth off to people who needs services, oh wait, there isn't any more bandwidth as the networks already overloaded..
Superuser
Superuser
Posts: 2,484
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Registered: 06-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Whats your usage like between 8am and 4pm? If you don't use hugh amount then it might be worth going for PAYG with an extra 2Gb of bandwidth, which would come out at £16.49 a month. Peak time on PAYG is 8am till midnight whereas Premier and Plus are 4pm till midnight, hence my 1st question.

Phil
Plusnet Staff
Plusnet Staff
Posts: 12,169
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Registered: 04-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Quote
Cost wise it would work out something like.. assuming everybody was on 20:1 8mb / 832kbps..

£12.40 + (£1,475,000 / 5000 / 12) = £37 a month.

plus net chuck on some profit etc.. and your not far away from the £40-£45 a month, and no need to traffic shapping at all..


Remember that the prices you are quoting are ex-VAT, so the retail price on that kind of product would be nearer £50 per month maybe a bit more. So we have to ask the question, what sort of customer would pay £50 per month for an Internet connection?

When you think on that traffic management is still going to be necessary. Unless you have a completely seperate realm you can't isolate 5,000 customers on a single central from the other customers on the other central pipes.

Even when you have 5,000 customers on a central your still only allowing 124kbps per customer. So considering that this type of product is going to attract lots of heavy users they're still going to see slowdowns on the network when only a fraction are using their connections, and to allow for full utilisation of the central you still need traffic management, same if you want to prioritise gaming and VoIP.

Essentially there are three stages to traffic management.

1. control the heavy users
2. prioritise the interactive traffic
3. give control to the customers

Right now we're at stage 2 and stage 3 is under development.

The other key thing is to understand where this leads. And where it leads is away from IPStream. IPStream wasn't designed with the type of usage we are starting to see, it was designed in age of browsing and email, not P2P, VoIP and video streaming. The next step is towards a new network on a product called Wholesale Broadband Connect. This is being designed for the web 2.0 world and with streaming and video on demand and stuff like that where you don't have to have the same worries about sessions and capacity. And when you couple it with the 3 stage of traffic management every customer can have control over exactly what they want to prioritise, deprioritise or block.
Plusnet Staff
Plusnet Staff
Posts: 12,169
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Registered: 04-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

Quote
you will prob say, down grade to BB+ package as this would be suitable for my needs.


As Phil suggest I would probably say that PAYG would be the better choice.

Quote
Just a note, How long would it take to change my account,
Say to Test, BB+ and if i didnt like it change back to premier.


A downgrade is normally processed at the end of the current paid period. That way you don't pay the Premier rate but be on a Plus service and it doesn't adjust your billing date.
Community Veteran
Posts: 26,341
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Registered: 10-04-2007

ISP's switch back to CBC rather than UBC for BT centrals?

If you change to PAYG with 12GB it would change over immeadiately, then drop your included allowance in a months time. You would also avoid the £14.99 regrade fee that way.

Look at the PAYG link in my signature
jelv (a.k.a Spoon Whittler)
   Why I have left Plusnet (warning: long post!)   
Broadband: Andrews & Arnold Home::1 (FTTC 80/20)
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ipdialup
Grafter
Posts: 25
Registered: 30-07-2007

ISP's switch back to CBC rather than UBC for BT centrals?

All a very interesting subject.

It's the same problem I guess all ISP's are trying to tackle, as people get more and more friendly with the web and start to want more and more interactive services, streaming video, p2p (to distribute this), tv on demand etc. and lot's of other fancy stuff, it appears the pricing models on the current wholesale side of things just don't seem to allow broadband at a price that people are prepared to pay, and ISP's can make money on, at least not without shaping down the bandwidth at peak times !

The new 21CN network that your talking about sounds very interesting, any more details or links to where I can do some reading?

I'm not that unhappy with my service, except for p2p during peak times, to be honest I wish their was a service I could subscribe to that would give me the 20:1 contention (faster upload) and also give me a bit more of a chance of hitting my line speed when I want to download things.

Wonder what could be achieved for £40 a month? It's another £8's more than I spend at the mo?

Is their a product that could be introduced giving the 20:1 contention and maybe a business level of QOS, but also allows p2p with say a 30GB peak usage cap?

I thought about switching to a business service but all the literature on the portal etc.. says p2p ain't allowed on business tarrifs, so I'm kinda stuck, all other options mean I loose the 20:1 contention and the faster upload.

Guess I'll have to wait and see what else comes along once this 21CN network starts to make it's presence felt !
Plusnet Staff
Plusnet Staff
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ISP's switch back to CBC rather than UBC for BT centrals?

There's a few press releases on BT's website mentioning Broadband connect, but not a lot of information yet. The 21CN stuff as lot of info about the voice side on btwholesale.com but not a lot about broadband yet.

Regarding the 20:1 connection (which I'll refer to to Max Premium as BT no longer refer to contention ratios) the only other product we offer with this is Business Premier. I can suggest we look at it for the upcoming product refresh (if it's not already being considered) as I'm sure there would be some interest.

To change though to any other product would mean the account was regraded to Max from Max Premium, what you probably want is PAYG on Max Premium rather than Max which we don't offer at the moment, but as I say, will suggest it.
lank111
Grafter
Posts: 215
Registered: 11-10-2007

ISP's switch back to CBC rather than UBC for BT centrals?

but will i get the same quality of service with BB PAYG as i would with premier?
Community Veteran
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ISP's switch back to CBC rather than UBC for BT centrals?

On Premier some traffic is Silver and there is an overall limit on the capacity allocated across all Premier users. This means at peak times there will be some slowdown due to contention on the Plusnet network.

On PAYG all traffic is Gold or better. The capacity allocated to PAYG is sufficient to minimise the contention. The more we use the pay more we pay so it is in Plusnet's interest to keep the speeds up.

For £38.99 you get 34GB. If you usage varies from month to month you could set a lower regular amount which is large enough to meet your lowest months and then pay £1.80 per 2GB for extra usage in heavier months.
jelv (a.k.a Spoon Whittler)
   Why I have left Plusnet (warning: long post!)   
Broadband: Andrews & Arnold Home::1 (FTTC 80/20)
Line rental: Pulse 8 Home Line Rental (£13/month)
Mobile: iD mobile (£4/month)
Plusnet Staff
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ISP's switch back to CBC rather than UBC for BT centrals?

If anything you should get a better quality of service. As far as the traffic prioritisation is concerned everything on PAYG as either the same as Premier (e.g. gaming, browsing) or is higher (e.g. usenet, p2p).

Also PAYG gets the same value-added services as Premier, such as Fax2Email, CGI and MySQL.