In a statement released on Friday, the Internet Service Providers' Association (ISPA) claimed that Ofcom's current system is having a harsh effect on small- and medium-sized ISPs. ISPA believes that it is extremely difficult for ISPs to expand their customer base beyond a certain size at present, because the cost of buying a higher-capacity wholesale broadband product is too great.
Small ISPs will typically resell products from BT's IPStream range. Larger ISPs can take advantage of other services, which can be based on BT's Datastream range, which offer greater flexibility but can cost more.
An ISPA spokesman explained that an ISP can find that it has outgrown a service costing £3,500 per year and has to pay as much as £30,000 for the next level. "If an ISP wants to provide a service to more customers, they can have to make a massive investment," he said.
Ofcom forces BT to price IPStream and Datastream at levels where there is effective competition between the two, but ISPA claims this 'margin squeeze test' (MST) isn't working. "We need an urgent review of the MST which has effectively placed a cap on the growth of SME ISPs," said Matthew Hare, managing director of Community Internet and chair of the ISPA subgroup on broadband. "Although the current formula supports the home Internet user market, the impact on business Internet services -- often retailed by small- and medium-sized ISPs -- could be devastating."
But having spent much of this year trying to bring more competition to the UK broadband sector, Ofcom isn't about to ditch its existing work -- especially with the next state of its strategic review of the telecommunications market due to be unveiled on Thursday.
According to an Ofcom spokesman, the MST will be examined again in 2005 when the regulator looks at the wholesale telecommunications market again.
The ISPA's criticism is just the latest in a series of attacks on the way that broadband pricing is regulated in the UK. BT's rivals, who use Datastream to build alternative wholesale offering, have long claimed that BT was executing a margin squeeze by pricing IPStream too cheaply. These allegations were given much credibility earlier this year when BT raised its IPStream pricing, just before Ofcom ruled that the services were indeed too cheap compared to Datastream.
Talkback
isp's should not be surprised that bt treats everyone, not just isp's with arrogant contempt. they have the same attitude to their customers and their staff. some of their staff try their best and deserve better; they should find something more worthwhile to do in the daytime. too many of their staff are pathetic untrained unmotivated drifting nobodies in anonymous call centres and just want to pass any problems to someone else.
i could not care less about their dismal existence as long as they do not inflict their incompetence on me as they have an all too frequent habit of so doing.
i find it impossible and expensively time consuming, to wade through this foul swamp of ineffectual nobodies,whose mistake rate must qualify for a guiness book of records entry, to obtain anything resembling proper customer service.
they treat their legitimate competitors with the same overpriveleged aloof disdain.
this country is filling up with comfort seeking unambitous grey nobodies who do not complain or protest at the greed culture of large companies intent of abusing and dumbing down the masses for their own ends
this is why bt can get away with their odious and sinister practices.
home highway customers are coerced into using bt broadband by the threat of charges for removal of the cheap and nasty home highway box if bt is not going to be the broadband supplier.
these charges are waived as are the connection and modem charges if customers do what bt wants and join bt for their broadband.
their billing is chaotic. their staff including some of their field engieers lack vital technical knowledge of broadband.
bt do not know and do not want to know what a customer is and their staff do not take ownership of customers' complaints.
they do not have to work to gain or retain customers like the rest of commercial businesses and they do not care if this attitude is apparent.
they have consistently abused their quasi monopoly and it will take a determined effort to move them from practices which are, have always been and will continue to be in place to purely serve their own interests.
even though they still enjoy a large amount of monopolistic commercial advantage and are in a position to help or hinder the wellbeing of british business; they are not interested in what is best for this country and choose to hinder commercial development and get clean away with this obnoxious behaviour as president clinton famously said of his behaviour, because they can.
they have no interest in playing fair with anyone and i for one, view bt as one more example of the establishment companies that distort and abuse the commercial and domestic wellbeing of this country.
we can nonlonger tolerate commercial competition from a monopoly.
bt must be broken up and its priveleges removed
they make me ashamed of the slavish british people who choose to bury their identity in such institutions and ashamed to be identified with the apatheti, lazy, comfort seeking, iunprotesting, uncomplaining amorphous masses that populate britain today.