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Ofcom rules price cut - where is it?

Malcb
Newbie
Posts: 9
Registered: 16-06-2011

Ofcom rules price cut - where is it?

Back in June 2011 Ofcom forces BT to cut the cost to ISPs of market 1 broadband.  Ofcom said this would result in lower prices for rural braodband
http://consumers.ofcom.org.uk/2011/07/better-value-rural-broadband/
http://www.ispreview.co.uk/story/2011/07/20/ofcom-forces-bt-to-slash-its-uk-wholesale-broadband-isp-...
etc.
So where is my price cut?  I'm not on ADSL 2 so why am I paying the same as someone who could get 20M?  And I don't even get 1M upload either.  And I'm paying for Extra package too!
 
15 REPLIES
Community Veteran
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Registered: 11-08-2007

Re: Ofcom rules price cut - where is it?

where is it? - I haven't got it !  Angry
Quote
The price reduction will be 12% below inflation per year and will apply to services provided using BT’s wholesale broadband network.
the new measure will only impact BT's up to 8Mbps (IPStream Connect) capable broadband products
jojopillo
Grafter
Posts: 9,786
Registered: 16-06-2010

Re: Ofcom rules price cut - where is it?

HI Malcb,
We don't have any plans to change our pricing structures, but we do have a product refresh once a year, so not sure what next years may bring. It does say in the article that consumers are unlikely to see price changes because of this.
Jojo Smiley
baldrick
Grafter
Posts: 128
Registered: 07-08-2007

Re: Ofcom rules price cut - where is it?

Does this mean the secret is out - it's not Ofcom we rural dwellers should be blaming for being ripped off by being charged twice the price for half the bandwidth, but Plusnet?
So where's the competition? Is this something that needs investigation?
x47c
Grafter
Posts: 878
Registered: 14-08-2009

Re: Ofcom rules price cut - where is it?

Presumably this is someone's funny idea about how to encourage other LLU suppliers into market 1 exchanges.
.......yeah, great idea, reduce the prices, and thereby reduce the profit. (sarcasm mode on) That will really encourage the other ISP's now that they see how much LESS they can make from each customer if the customers are given a price cut............or maybe these other suppliers might just possibly now be even less willing to do anything to support rural broadband.
Some poster please tell me I've got this back to front...I simply cannot believe it.
I suppose by giving a price cut to market 1 areas it might encourage those on the margins to take up broadband, but I'd suspect that by now the market is becoming saturated and most new customers are being achieved by 'churn' from other suppliers rather than by new first time takeups.

Community Veteran
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Registered: 27-05-2011

Re: Ofcom rules price cut - where is it?

I thought I'd seen this before  Roll eyes
http://community.plus.net/forum/index.php/topic,92666.0.html
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Registered: 10-04-2007

Re: Ofcom rules price cut - where is it?

The best thing to happen would be for OFCOM to impose a mandatory price cut (which must be passed to the end user) for all users who can't sync at 4MB or higher where there is no competition on the exchange.
The current situation of paying more for an inferior service is WRONG!
jelv (a.k.a Spoon Whittler)
   Why I have left Plusnet (warning: long post!)   
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Community Veteran
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Registered: 11-08-2007

Re: Ofcom rules price cut - where is it?

Presumably the logic is, that if BT are forced to charge less for 20CN, then if an LLU operator came in with ADSL2 (or better) with a corresponding higher cost, then a proportion of BT's customers will migrate to the more expensive better service.  The LLU operator can charge a competitive market rate, and BT will be under pressure to upgrade everyone to something better than 20CN.
Mayfly
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Registered: 04-06-2009

Re: Ofcom rules price cut - where is it?

Is this practice of 2 tier charging common to all ISPs or just something PN do?
Community Veteran
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Registered: 29-01-2009

Re: Ofcom rules price cut - where is it?

I think the true incentive here is to force BT to upgrade more of the market 1 exchanges to 21CN, as the price cuts would no longer apply then. Certainly, after a few years of cuts, the income-vs-cost balance shifts sufficiently for BT to make new plans.
Ofcom expected the ISPs to use their extra cash to buy additional bandwidth - and that this would allow end-users to experience higher speeds. Not sure how this works though. And if Ofcom expects the ISP to spend the extra money, then obviously they don't expect end-users to see a difference in their prices.
As far as I can see, this price cut puts ISPs in a funny position on market 1 exchanges when 21CN is finally deployed. Because they will pay less, there is an incentive to keep the subscriber on 20CN, and not allow the upgrade!
And where the ISP passes on the cut to the subscriber, then I can see that there would be price-concious users who would demand to not be upgraded.
In fact, that last problem is a good reason for *not* passing on the cut. Plusnet are the only ISP I've seen that set consumer prices differently for market 1, 2 and 3 so I guess they will be the only one to suffer this dilemma. For all other ISPs, it is just a slight adjustment in the overall budget.
Plusnet Customer
Using FTTC since 2011. Currently on 80/20 Unlimited Fibre Extra.
dmhome
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Registered: 31-07-2007

Re: Ofcom rules price cut - where is it?

So PN have no plans to change their prices. May begin to feel that I am being taken for a ride when consider the gap between the different market prices ( £12.99 for market 1 as compared to £6.49 for th other markets). No problem with PN making a profit but this appears excessive in the extreme. Added to this is the fact that being on a rural exchange I get just over 1mb of download speed (accept that this is not fault of PN , just a lack of governement pressure on BT) and you can see why many customers in Market 1 areas feel they are being cheated. If OFCOM has forced BT to reduce prices then this should be passed onto customers.  Since being with PN I have always considered it to be a company who has treated customers fairly - this is your opportunity to prove this is still the case.
Community Veteran
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Registered: 29-01-2009

Re: Ofcom rules price cut - where is it?

I just read that Ofcom brought these price controls in during August 2011. Presumably BT don't have to do anything to their (wholesale) prices until August 2012?
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Using FTTC since 2011. Currently on 80/20 Unlimited Fibre Extra.
ChrisL
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Re: Ofcom rules price cut - where is it?

Quote from: dmhome
May begin to feel that I am being taken for a ride when consider the gap between the different market prices ( £12.99 for market 1 as compared to £6.49 for th other markets).

I think this misunderstands the situation. We are not being overcharged by Plusnet for being in Market 1 -- those lucky enough to be in M2,3 have the (Ofcom regulated) discount passed on to them. This discount is not passed on by other ISPs. So Plusnet is being more generous, not less.
The possible reason for changing ISP remains that others may charge less for the same service (or offer a better service) -- though you need to read the small print very carefully!  It certainly has nothing to do with "being taken for a ride".
Yours, also suffering in M1,
Chris
Malcb
Newbie
Posts: 9
Registered: 16-06-2011

Re: Ofcom rules price cut - where is it?

As I understand it M1 is being forced down in price from BT wholesale but neither BT retail nor ISPs are passing this on.  As said in a previous post, presumably Ofcom's theory is that BT wholesale then will change rural exchanges to ADSL2 so they can put the price back up.  But that rather remains to be seen.  If BT retail has a large part of the market then what it loses on wholesale it makes up for on retail.  Only if rural ADSL 1 prices come down will the theory work.  Yes people would have to opt to pay more for higher bandwidth but given the increase in on demand video etc. many people would go ADSL 2.  In any case it hardly seems fair that 8M and 20M are the same price.
My understanding of LLU, M2, M3 price being cheaper is that competition and the fact that 2/3/4 etc. companies share the cost of exchange maintenance is the reason why the cost is less.  It's hard to get away from that unless you either subsidise rural exchanges or charge town exchanges more rates.
I think what annoys rural users is the fact that we are not seeing this price cut passed on, either in money or more bandwidth.  And although Ofcom say it might be seen as more bandwidth all the all press said it would be a price cut raising expectations.  Plus more bandwidth is an acceptable excuse, how we would know that was in fact true?  And in any case we are paying already for a service of acceptable quality, we're not paying for unusable are we?
Personally I'd prefer the ADSL2 please :-).  But I'm not holding my breath on that.
itsme
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Re: Ofcom rules price cut - where is it?

Quote from: Malcb
My understanding of LLU, M2, M3 price being cheaper is that competition and the fact that 2/3/4 etc. companies share the cost of exchange maintenance is the reason why the cost is less.  It's hard to get away from that unless you either subsidise rural exchanges or charge town exchanges more rates.

It got nothing to do with exchange maintenance it's OFCOM forcing BT Wholesale to have artificial higher prices for Market 1 exchanges so it would encourage LLU companies to supply a service and undercut BT. Unfortunately for small rural exchanges the profit is not there for LLU companies and/or physical space to install the equipment. So now OFCOM are having a second thoughts on their policy.
Also can I have the same price as ADSL as my speed on ADSL2+ is only 2mbps.