Yarwell

Your costs are all based on the standard. It is my belief that BT Wholesale can offer discounts for volume and does so.

These can be quite significant and may affect the calculations for BTRetail. BT's last quarter accounts say over 1m BTRetail FTTC and 1.25m in total so Retail have more than 4 times as many as the rest put together. A volume discount for 1m customers may decrease the price significantly.

Still if all your costs are correct it is 'amusing' to see the CP with the highest margin claiming a margin squeeze!

I can see another reason for this:
I wonder if the next set of results will see the number of TalkTalk customers falling which could hurt their finances as they must still be paying for the LLU investments.

Yet they now have to pay OR for FTTC connection reducing their margin by £7.40 according to your costs for each FTTC customer. If they get too many people wanting 'FTTC or we move CP' that could hurt their pockets.

on the triple play, shows how good their advertising is when I wasnt aware of it

cross subsidy is rife in all lines of business. it may be illegal under that act (I take your word for it). Also sky margins on their broadband are likely as thin as BT's but I expect they cross subsidising as well except with sky its harder to prove as they dont have to reveal their backhaul costs.

Increased Bt/plusnet prices, consumer loses, reintroduced traffic shaping consumer loses. BTw made cheaper, possible consumer win as it helps zen, aaisp etc. without touching infinity/plusnet pricing. No action, in my view win for consumer also. The current BT product line up is probably BTs best for a decade.

So what do you think the likely outcome of this investigation is? Maybe you think something will happen I havent considered.

also am curious how free broadband isnt a loss leader.

Edited by Chrysalis (Fri 03-May-13 23:02:27)

Random? Don't think so.

When I worked at Zen the number of calls we got through from customers who had Talk Talk on the phone claiming they'd bought us out was astonishing.

I talked to a few people in other ISPs and they were seeing similar.

Then there was the line take over debacle, oh and the erroneous bulk migrations...

In reply to a post by Chrysalis:

cross subsidy is rife in all lines of business. it may be illegal under that act (I take your word for it). Also sky margins on their broadband are likely as thin as BT's but I expect they cross subsidising as well except with sky its harder to prove as they dont have to reveal their backhaul costs.

Sky aren't vertically integrated for broadband, only TV, and due to this are regulated to an extent via the rate card and requirement to run an open access platform.

In reply to a post by Chrysalis:

So what do you think the likely outcome of this investigation is? Maybe you think something will happen I havent considered.

also am curious how free broadband isnt a loss leader.

On the first one no idea, on the next point as I mentioned there is no 'line rental' for MPF LLU broadband, just the line. The actual incremental cost of the broadband part of the product, capped at 40GB and heavily traffic managed, was relatively minor. They took a gamble that the charge for the line rental and calls would cover those costs via cross subsidy and were right.

Interesting and very, very bad indeed.

Thanks for the information.

In reply to a post by kitcat:

Your costs are all based on the standard. It is my belief that BT Wholesale can offer discounts for volume and does so.

Yet they now have to pay OR for FTTC connection reducing their margin by £7.40 according to your costs for each FTTC customer. If they get too many people wanting 'FTTC or we move CP' that could hurt their pockets.

On the first point you may be right, and equally Openreach may also have volume discounts.

FTTC doesn't reduce the TT margin because they charge a tenner a month extra for it (£8.33 ex VAT). Their own strategy presentations show it as a positive thing, though at the time they weren't anticipating BT Retail pricing so low or with such a small differential to ADSL.

BT Retail's FTTC differential is only £5/month over ADSL and that includes an extra 30 GB/month of usage. As this is less than the cost to TT of procuring FTTC you can see the problem.

http://www.thinkbroadband.com/news/5831-new-low-pric...

BT shaves £3/month off the retail price of entry level of Infinity, undercutting Plusnet

spreadsheet updated

Obviously can't be taken account of on that spreadsheet very easily but you also have BT spending nearly 300 million on sports rights per year and providing them, free of charge, to their customers.

There's certainly some bruising regulatory arguments to be had in the next months.

still leaves Talk Talk looking like they have a bigger margin but can't make the sales though ?

Sales appear to have improved for Sky/TalkTalk on FTTC, issue is lack of promotion of their products in a lot of cases I suspect.

The fall out from the TalkTalk/Tiscali issue may be clouding many peoples thoughts, and the 'hatred' of Sky not helping too, look at reaction of o2/be customers.