"Market" Pricing

With so much alleged competition I am baffled by the continuation of different rates on different exchanges. My sister is moving four miles up the road to a different exchange which is no longer a "low cost" one.

Strangely looking at Uswitch BT and John Lewis seem to be charging the same as everywhere else but PN want a tenner a month more for the basic BB service. Am I missing something?

I suppose one should be grateful for a decent service at all!

Strange re John Lewis but could be a policy choice.

Re Plusnet charging more, that is incorrect. The correct interpretation is that the other ISPs are charging high in Plusnet's low cost area.

Costs in Plusnet's low cost area are lower for all BT Wholesale-based ISPs. Very few pass that on. Plusnet are to be commended.

EE used to charge differently as well, but not for the same reason as Plusnet. It was based on the old Orange LLU areas. Similarly O2 had, and Sky, TalkTalk and probably Vodafone have similar price differences.

"Never knowingly undersold".

The OP is quite correct when he states that PN want more money per month for the basic BB service outside 'low cost areas'.

Oddly I have a PN ADSL service at a Market A exchange. At the moment the BB itself is FOC, and I am expecting to have to leave when the 18 month contract expires in September. Vodafone would provide FTTC for a much lower price.

Plusnet give a lower price in low cost areas. Others don't.

I think if you look at the prices BT and EE charge you will find the Plusnet prices at "out of low cost" areas (normally Market A exchanges) will be comparable with those. Introductory customer-grabbing offers excluded.

In other words the higher Plusnet prices are similar to what the others charge everywhere.

So which are doing the ripping-off?

The Plusnet customers at Market A exchanges who have to pay more than those at other exchanges are being ripped off. The phone costs are the same at both types of exchange so why are do the broadband prices differ now that we live in an age where take up rates are very high?

We live in a world of introductory offers and you have to keep moving, or haggling with a supplier to get the best prices. People don't like changing which is why suppliers can get away with the higher prices. Logically if everyone kept moving the prices would be much more similar.

The costs to the ISP are not the same. The wholesale pricing is based on a Market A exchange. Ofcom subsequently allowed BT to lower the wholesale pricing in exchanges that had more competition but do not allow BT to lower the prices in the old Market A areas.

PlusNet use the lower wholesale pricing to provide cheaper broadband in those exchanges.

Ofcom do this because they want to encourage competition in the Market A exchanges and believe the best way to do this is to make the wholesale price artificially high.

So, blame Ofcom for not allowing BT to provide lower wholesale prices in Market A. But, you shouldn't blame PlusNet for passing on the lower wholesale costs in the other exchanges.

Because BT Wholesale charge more where there is no LLU. That's what Market A is. This is also why Plusnet deals on ADSLx are rarely available on Market A exchanges.

As for users haggling and having to keep moving, most don't. Even retention deals are becoming much less generous.

Edit. As Ian says but I forgot. It's Ofcom force BTW to charge more, for the reason he gives. To encourage LLU suppliers to install their kit, as the Market category does not change immediately when they do. It changes occasionally, as in has only done so two or three times since LLU came along.

Edited by RobertoS (Tue 31-Jan-17 08:30:41)

Sky used to do this - it would almost double the headline quote as they only offered 'sky broadband connect' I think it was called? Now when checking my Market A exchange it tells me I can't actually get broadband from them anymore - but can get line rental. Odd.

I wonder if they like TalkTalk wont supply off network exchanges anymore.

Are any providers still rolling out LLU? If not I would think higher pricing in Market A exchanges is no longer justified by OFCOM?

Sky dropped connect because it was expensive and was pretty rubbish - wasn't doing their reputation (some may laugh at that) any good.

Then lobby Ofcom. It is down to them to release the shackles from BT.

AIUI TalkTalk are still expanding their coverage. I don't know about Sky.

I also know that samknows is not up to date re BTW WBC availability, so may not be for LLU either. Their page we use I think is rather a minor aspect of what they do these days. See Great Massingham and the imgur link in this post.

It does appear that I could order John Lewis BB at a Market A exchange. After the introductory period the prices rises to about £26.50 and would be £1 pm cheaper than Plusnet broadband during their introductory period. After the introductory period the Plusnet price is £35.48pm

Where is the sense in that?

Thanks to the OP for pointing out the JL option.

Origin Broadband are the cheapest I have found on a Market A exchange.

In reply to a post by ian72:

So, blame Ofcom for not allowing BT to provide lower wholesale prices in Market A.

Ofcom set charge controls on market A wholesale pricing to stop BT Wholesale from over-charging.

Edited by Oliver341 (Tue 31-Jan-17 11:03:33)

There are exceptions Bob. TT and Sky have unbundled my exchange a few years back and still Market A. https://www.samknows.com/broadband/exchange/EAGLE

Thanks for all the helpful replies. It really does seem a "dog's breakfast".

For info the exchange concerned is MRCHL SK11 9AH. There is limited FTTC for some who may want it but the basic ADSL has not changed for over ten years.

What is particularly confusing is that all the BB checker websites seem to all come up with different figures and some do not even show PN at all!

OFCOM may well be part of the problem but with BB being considered a universal service and down the same line as the telephone I would have thought that a "universal" price would be available in these times.

Hey ho.....!

Meldrew

In reply to a post by meldrew:

OFCOM may well be part of the problem but with BB being considered a universal service and down the same line as the telephone I would have thought that a "universal" price would be available in these times.

It's a complex situation because at the (usually) smaller market A exchanges there a fewer customers, hence lower return on investment. So BT Wholesale charging more on these exchanges is justified, but Ofcom have to set limits otherwise BT Wholesale will abuse their monopoly and charge excessively.

In reply to a post by Oliver341:

In reply to a post by ian72:

So, blame Ofcom for not allowing BT to provide lower wholesale prices in Market A.

Ofcom set charge controls on market A wholesale pricing to stop BT Wholesale from over-charging.

Ofcom do both.

The prevent BTW from over-charging, to protect consumers, and prevent BTW from under-charging, to encourage LLU providers to consider the exchange.

The latter control stays in place even after LLU companies turn up, so that the LLU provider can be assured to have competitive advantage for a while, so as to generate some RoI.

In reply to a post by WWWombat:

Ofcom do both.

True, but in recent times Ofcom documents have reasoned that it's to keep wholesale costs down, probably because the LLU roll-out is all but finished now.

When LLU was being rolled out, then I can see that the higher Market A pricing is a way to encourage suppliers to make an investment in LLU.

However, now I see it as a discouragement for BT to make investment in Market A areas - they have the choice of a big investment for a small return due to there not being many customers, or no investment at all with a protected return that is better than in non-Market A areas.

In order to encourage investment in Market A areas Ofcom need to reduce the charge (and hence profit margin) for the existing 20CN equipment. The cost has already been amortized, so such a move would get rid of the excess profit for doing nothing.

In reply to a post by professor973:

There are exceptions Bob. TT and Sky have unbundled my exchange a few years back and still Market A. https://www.samknows.com/broadband/exchange/EAGLE

But as has also been set Ofcom don't very often review the status of exchanges so even though LLU has since arrived they haven't updated their lists to show they are no longer Market A. And as it is regulated Ofcom are the only ones that have the power to do this.

Thank you form pointing that out. They told me they would use Vodafone for backhaul. I had a bad experience with the Post Office and their useless, Talk Talk backhaul

Origin use Plusnet as their back haul. I have 2 lines. One with Plusnet and one with Origin - both go through plusnet gateways.

In reply to a post by sheephouse:

In order to encourage investment in Market A areas Ofcom need to reduce the charge (and hence profit margin) for the existing 20CN equipment.

I'm sure Ofcom want the wholesale price at Market A to be as low as possible, but further price control reductions could lead to court action if BT deem it "unfair". BT took Ofcom to court for Ofcom's FTTC price controls for instance, but BT lost that one: http://www.telegraph.co.uk/business/2016/06/20/bt-lo...

The court action you mention related to FTTC and pay-TV. I can understand that - BT have invested money in new FTTC equipment so that they can gain customers for pay-TV to compete with Sky, and they want a return on that investment.

In 20CN Market A areas BT haven't invested anything for a decade or so - Sky and Netflix etc can't compete with BT for online TV as the broadband speed is too low for those services (I'm with Plusnet, and they won't supply TV to anyone with less than 15Mbps download - which means no 20CN customer can have it). So the result is BT keep a very comfortable margin with little risk of competition eroding their customer base as the only option for broadband is BT wholesale. There are in fact fewer and fewer ISPs that will provision 20CN connections now - I can't even get a phone line from TalkTalk, and even premium ISPs such as AAISP no longer provision 20CN. And the effect of Ofcom's price restrictions means that I pay much more for an ADSL Max connection than I would for a FTTC if it were available.

Certainly Ofcom is mindful of this:

In reference to www.ofcom.org.uk/__data/assets/pdf_file/0021/57810/WBA-Final-statem...:

BT�s services in Market A will be subject to a charge control in order to ensure that
BT does not set excessive prices for wholesale broadband services which would
ultimately be passed on to consumers. We are imposing a CPI-X charge control and
the value of X will be 10.7%.

But I also think it's a case of Ofcom having to pick their battles with BT.

Thanks. There pricing is very attractive, I could consider becoming a customer when my existing Plusnet introductory offer contract expires.

In reply to a post by professor973:

There are exceptions Bob. TT and Sky have unbundled my exchange a few years back and still Market A. https://www.samknows.com/broadband/exchange/EAGLE

Same HERE in Marden / NDMAR !
But we have only TT LLU.

While I understand the reasons, the fact remains that me and the other ~1500 users on our exchange have been paying MORE for past 13 years !!!
Seems that even if SKY LLU would come, it won't help !
There appears to be NO chance we will ever lose the Markett 1 CURSE !
And it's not like we are in the back of beyond, just 7 miles south of Kent's 'capital' - Maidstone.
Regards
Martin

To all posters. Starting here because it has been quoted so many times in the thread.

In reply to a post by professor973:

There are exceptions Bob. TT and Sky have unbundled my exchange a few years back and still Market A. https://www.samknows.com/broadband/exchange/EAGLE

Market A in fact covers exchanges with two Principal Operators, so presumably at the time the allocations were made only one of those two was present as well as BT Wholesale.

Nothing will change until the next review if there is one, or until Ofcom decide to do periodic updates based on changes since the list was drawn up (2013) and came into force (2014). Something they have never done previously.

The difference between the old Market 1 and Market A is that Market 1 was specifically BT Wholesale only. Market A any exchange with fewer than three Principal Operators at the time of finalising the list.

It's a pity samknows still haven't updated their "Ofcom" classifications