Sunday, 18 November 2012

New A&A Home::1 tariff

We've come up with a new tariff for home users, called Home::1.

It is always tricky coming up with any tariff for Internet usage, and a lot of customers do not realise the issues. For some things we have a straight forward cost to providing the thing we are selling, so we simply have a profit margin for selling that service. Some things create extra support work, so need a higher margin. Some things need equipment to handle lots of customers, making the cost per customer hard to work out and vary depending on how many customers we have. This sort of issue applies to many businesses.

However, the biggest issue every ISP has to consider in creating a tariff is usually the actual Internet usage element. I have to say that I am hopeful that this issue will go away in time. It has to, and the technology to supply faster and cheaper backhaul links is always advancing, so it should. But right now, the bandwidth/usage of Internet is an issue.

As a really simple example, customers will see an 80Mb/s FTTC line as something that should cost very little (we start at £30/month). But if they, as one extra customer, use 80Mb/s at our peak time of day (just for the peak 15 minutes, one day in the month), we have to have 80Mb/s extra capacity to BT (we pay BT on 100th percentile usage). That extra 80Mb/s costs us (and any other ISP) just for the BT backhaul on 21CN (which is cheaper than 20CN), around £4,700 a month. There are many other costs involved, that is just the main one. Thankfully, at that exact moment, hundreds of other customers are using much less. With enough customers it averages out sensibly. But you can see how usage is an important factor.

It is not inherently a special issue to Internet usage - the same issue happens with water supply. It has costs for supply and limited size pipes (literally!). It has contention and congestion - if everyone turns their taps on in the same street at the same time then they will go at a trickle. It is still sold at a fixed price in many places (depending on size of house), even though usage per house can massively vary.

Internet is a bit like that - the average usage at peak times for Internet, given unlimited usage and speed, is not a lot more than 100Kb/s. In our case it is nearer 120Kb/s at present, but it is a lot less than people realise. On that basis one can, in theory, dimension and price a service on that basis.

One issue is that the actual usage varies a lot. Whilst the average is low, unlike water supply, the peak users are massively higher, just there are usually only a few of them. It is possible now to get 330Mb/s FTTP links, and if someone has one of these on an uncongested network it is possible for someone to run that link flat out at that speed, something like 3000 times the average. Scary!

A big issue is competition. If one service provider has a really good deal, and no usage caps, and no fair usage policy, and no usage charging, then the people drawn to that service are the ones with way higher average usage! If there was only one provider, the pricing could indeed be based on the actual average of usage. But we all want competition, so we have this problem.

So, what of the new A&A tariff?

The current tariff system has a cut off at 6pm, before which usage is more expensive. Customers don't like that. It also has automatic charging if you use too much (beyond a degree of give and take within the tariff), and customers don't like that. Well, residential customers don't like it. The business customers pay for usage during the day, and use it, and generally are very happy.

The new tariff is just usage per month (download only) that is any time of day or night. This is simple, and easy to understand, and avoids the issues with time of day. It also stops usage at the cap, allowing top up if you want, but you don't have to. We are starting at £25/month for 25GB, but for an extra £10/month that can be 100GB. It makes the service easier to compare with other ISPs.

Whilst this is simple, it is a risk for us. It could be that we start to attract heavy users that download a lot during the day. As I explain above, as long as the averages work out, that is not a problem, but if we start attracting a lot of such users then the tariff won't work.

To try and manage this gamble we are making it residential only, and setting what we think are sensible usage levels which would discourage people that torrent 24/7. Even so, the main risk management is making this a separate and new tariff. We can try it out and see how it goes. If, say, in three months time, we find that the usage is rising too much and starting to be uneconomical, we can simply stop new supply of this tariff, and have a re-think. This also means we can make sure that the new service does not have any adverse impact on our business customers.

This is not the first time we have done this sort of tariff. We used to have unlimited usage tariffs, and a handful of people are still on those tariffs from a decade ago. We hope we have picked sensible levels and prices to appeal to sensible customers who want the lower risk and simpler tariff.

So, right now, we are trialling with some existing customers (see status pages). Hopefully we can fully launch this before Christmas.

It does require some coding, which we have been busy on over the last few days. We have to make the LNS handle a quota system so that we know when someone hits their limit without any delay. We have to have a captive portal to advise customers that their line is shut down and offer the top-up option. We have to make new billing options. It is all good fun :-)

What we have been very keen to do is ensure the service is the same high quality we always provide, with the same level of monitoring and technical support and control. And, of course, IPv6 addresses, which is one reason it is called Home::1.

P.S. Go Pauline! first on the new tariff :-)

43 comments:

  1. Darn I don't quite fit - I've been >100GB over the last couple of months and *definately* would if I told SWMBO she could use iplayer during the day :p

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    1. Out of interest, would 200GB for yet another £10 work?

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    2. Quite possibly.. would end up the same as I pay now more or less, but without the daytime tariff.

      Or 100GB with the option to buy another 100GB during the month? (And the moon on a stick).

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  2. This looks like a good tariff. I know a few people who have either rejected A&A or changed from it due to the charging structure. Although to be fair they are people who like the torrents so probably they really are better elsewhere.

    But the numbers chosen don't make it a good option for me.
    My average usage in the last year is about 21-22GB per month with 80-90% being off peak.
    One 1 occasion I used about 50GB, but on 4 I used 25-28GB meaning I would have had to have bought a topup but got only a tiny usage of it on 4 occasions in the year. It's not so much the money, as being annoying :P

    I guess whatever levels you set *someone* is going to find themselves *just* over the basic limit though but I wish it was £30 for 30GB :) But I think the older tarrif works better for me. I presume they are not going away?

    On the other hand though, your post has reminded me I'm still on BE paying quite a premium and as almost all of my usage is now off peak unlike when I changed to it, it makes no sense, so I guess I'll change to fttc some time soon. (I wish there was a way to do this without having to take a day off work though!)

    It's good to see you are making this available though

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  3. This isn't exactly related to this post but I wasn't quite sure where else to put it, and it's kind of relevant.

    Can I suggest that you consider somewhere very clear on the front page or elsewhere of the website that FTTC is the same thing as Infinity from BT?

    I know many many people who only know the word infinity for fttc, and who as far as they are concerned BT is the only provider of "super fast" broadband because nobody else has infinity. There seems to be zero understanding amongst the general public that infinity is just BTs name fo r their product and the same service is available elsewhere. I guess BT's marketing department have done well :)

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    1. Obviously not quite "the same thing" as they do a home hub and crap, but the same "link" at the very least. I am unsure if I would be allowed to use the term "Infinity" though.

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    2. yes indeed, I'm just concerned how many people don't know there are FTTC services other than infinity, or that infinity is anything other than a brand name...

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    3. So "Infinity" is a trademark for BT's FTTC service, but surely the word "infinity" can be used anywhere as you see fit?

      e.g.
      "Use our FTTC service to take your broadband to infinity!*"
      "FTTC is the line service other providers may use the word infinity with."

      * "not really infinity, broadband speeds will not reach infinity"

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    4. Why not go Buzz Lightyear on this and promote A&A FTTC as "To infinity and beyond" :-)

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    5. One wonders what the royalties are on that...

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    6. If my understanding of http://www.trademarkia.com/to-infinity-and-beyond-75428904.html is right, the royalties are $0 as the trademark has been abandoned :-)
      (But a month free on Home::1 is always welcome ;-))

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  4. Yeah the whole 'Infinity, only from BT' stuff. Literally true, but horribly misleading.

    Hopefully TalkTalk etc. are making a dent in that perception as they also ship FTTC.


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  5. Really like the look of this. It wouldn't save me a huge amount, but would mean that I didn't have to try quite so hard to avoid doing things during the day.

    Three questions:

    * I couldn't live without my /27. Any chance existing home users could keep their address allocations?
    * Ideally it would be nice to have the option to be automatically charged £10 for an extra 50 GB.
    * We generally use 200-250GB (house full of engineers). Would you be comfortable with multiple top-ups per month?

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    1. Certainly if you sign up now on the trial we'll keep the /27, and we may do anyway for existing customers changing over anyway - to be decided. The automatic charge is an interesting one. It sort of goes against the idea, but we could offer either "lock down", "slow down", or "pay up" as defaults I guess. I am also considering £10 more again to make 200GB, but not decide yet - all feedback welcome.

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    2. That's great. Just one more question - will there be a capability for diligent customers to buy a few top-ups in advance to avoid running out? I could otherwise end up with a grumpy family when I'm away!

      The "pay up" option would seem to me to make sense. It's usually good to make it really easy for customers to give you money!

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    3. The top up lasts to end of following month but no real reason not to allow top up before you run out, with that same caveat.

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  6. Not really related to this post but to ISP costs in general, I was wondering what the cost structure looks like for Local Loop unbundling? Given that my rural exchange will probably never get 21CN at this rate... the idea of a cooperative of users getting together and funding the startup costs for an ISP to install (better) equipment in an exchange came to mind, just idle curiosity but if you fancy discussing how these types of costs come together it would be of interest.

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    1. There are several carriers that do LLU (and we connect to some, and are working on more). In that case they charge us in various ways, some similar to BT and some not. If we did LLU ourselves we would be buying back haul links, and so on, and would probably have to account for usage in a similar way. If there is someone that actually has LLU and owns the dark fibre interlinks then they could put faster and faster kit on those fibres are comparatively low cost to provide cheap backhaul. Main thing is that LLU puts some pressure on BT to be more sane on the pricing.

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  7. Oh, and I like the current after 6pm tarriff - the only time I've gone over was when the SO had got herself into the habit of streaming video during the day..... haven't been over the limit with pure off-peak, gotta watch bank holidays though!

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    1. No plans to get rid of current tariffs.

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    2. Oh, and you know we do bank holidays as off peak now?

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  8. Interesting development - I have been wondering about having AA at home: I have two AA 80/20 lines at my company, and it has attractions for some of the off-site backup and other ambitions that I have. BUT: for reference I currently have PlusNET 80/20 with 250GB for £19.99 p/m and usage between 00:01 and 05:59 is not counted.

    So, 200GB seems a more practical offering; but it will be interesting to see how your use of residential status acts as a proxy: we use WAY more at home than at the lab.

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    1. I suspect AAISP may operate with larger gross margins, but I love the way they do things right and want them to be profitable. The "free" usage in the small hours would be very welcome on the new tariff though and would encourage backups and stuff at that time.

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    2. I think it is better kept simple, to be honest, sorry.

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  9. This is good news. I work from home, but my usage is actually mostly in the evening with IPTV. If 'er indoors has a sick day, Netfilx goes on, and I am in for a hefty bill.

    I dont like the idea of being cut off unexpectedly. Automatic topups please.

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  10. So it sounds like AA's heaviest usage is during the day? That's unlike our customers, where it's between 8:30 and 9:30 pm, despite the heavy business usage during the day. Sounds like AA needs to build a tariff that attracts evening usage to help even the traffic.

    In regards to the top-up, why not allow the customer to have an automatic top-up with a max limit per month?

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  11. Could the paywall/cut-off code be re-used to support capping on 3G?

    Would be nice to be able to buy a "quota" of usage and be cut off once that's hit to stop racking up large charges.
    Also it would be nice if that "quota" could be pooled onto multiple sims.

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    1. Yes, in fact the code has been designed with that in mind. On the mobile it is upload+download, not just download, and all of the metering and quota logic supports both variants. Pooling a quota is not likely though. We'll see when we can offer optional caps on SIMs later.

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    2. Pooling would be nice, It would certainly be a distinguishing feature as it seems most mobile providers aren't interested.

      Personally I'm of the opinion if I pay you for 1GB of data over 3G does it matter if I use it on 1 or 3 devices I'm still only going to transfer 1Gb of data regardless of which device it was on.

      I suppose it would increase the complexity of tracking the usage and making sure people aren't able to go over what they purchased.

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  12. I must be missing something because I cannot be the first person to think this, so let me lay down an idea and someone point out the major flaw;

    You sell two classes of service (and within those you can still have the different usage levels), except that the "Economy" class of service will allow you to use up to 80Mbps any time of day or night but when you as an ISP approach 90% (or some other workable figure) of what you budget to pay BT that month, based of predicted customer revenues, you start gentle traffic shaping to slow that customer connection down.

    Is the major objection to this simply that "A&A doesn't do that sort of thing" because of the ethos of an unfiltered, unhindered and unrestricted service?

    If so...well, maybe rethink it with the notion that it's not the core service you do, just an "alternative / budget" offering. Sub brand even ? You could call it B&B - Budget & Broadband :)

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    1. I am very keen not to compromise the quality of the service by slowing it down for home users. We have discussed it, and even considered an alternative brand for it, but overall we'd rather sell a good service and find a tariff that works for us and customers whilst doing that.

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    2. It shouldn't ever be something that's forced upon someone, but if there was a very clear option and choice about it, I think it might relieve anxiety in some customers and not put them off because they're worried they'll pay too much.

      The option could just be like; "When you approach 90% of your monthly usage allowance, we will notify you by email, at which time you may choose to purchase additional credits (at a slightly higher rate) or we will enable dynamic rate limiting on your connection at busy times of day. All settings can be adjusted from control panel, to manage this automatically"

      ie. They can tick a box that says 'don't email me, just charge me for more if I use more' and then they'll never get rate limited, just a big bill.

      Some people don't want to risk getting a bill, and like a safeguard in place - a soft rate limit with the option to remove it could probably be quite agreeable to certain customers.

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    3. Simple version of this - an hour-by-hour schedule for the week, letting you set a 64kbit/s rate limit at any times of day where you don't expect usage, with an alert if the limiter is restricting you for more than (say) 15 minutes in the hour.

      64kbit/s sustained for a month is around 20GiB, give or take. On the minimum tariff, that leaves it rather tight for the rest of the month, but that's why the alert - lets you find out early on that you have something downloading stuff in the background.

      For a family, you could then set the limiter to "on" for the times of day when everyone should be out at work or at school (e.g. 9am to 3pm). You could choose to set it on 24/7 whenever you're all away (e.g. for the week where you're visiting grandparents), so that if someone "accidentally" leaves a computer logged in and downloading games from Steam, it won't be too expensive.

      Bonus points if you add a "no data" limiter (restricting everything other than access to the control pages to remove it), and a higher speed (e.g. 128kbit/s) that allows for a single VoIP call while limited.

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  13. Is it reasonable to assume that FTTP pricing is as FTTC? So £25 basic, add £10 for fibre, add £10 what is currently premium for 100/15 speed, add another £10 for a 75GB limit. So £55 in total? Might be interested. It's £10 more than we pay at the moment for 3 units but losing the daytime restrictions might be useful.

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    1. FTTP needs tidying - there are several options BT have for us to use and some they are retiring as well as some that make no sense, so we will probably be offering one or two FTTP options on this in due course.

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  14. Cheers for the mention in your blog it's the only bit I understood lol xxx

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  15. When I left AAISP, I promised that the moment you introduce a tarrif that enabled my kids to use the internet from 4pm without worry about going over caps, I would return.

    I think 100GB would do the trick. I'm happy to cancel my contract with my existing ISP and pay any early release fees. Can I come back and jump straight onto the trial?

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    1. Yes, email the trails team. We can work that out for you...

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  16. Just love the new tariff, working from home now and even with "quite low" daytime traffic (<10Gb/month)(just a few webex, exchange mail, virtually no VoIP) the units are flying out very quickly (on 20CN).

    Just an idea, if my understanding is right the cost is mainly linked to bandwidth, not volume, so I would be happy to have limited BRAS rate during the day (no big file transfer) to reduce impact on A&A cost to make Home::1 sustainable.

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    1. That does not help - ultimately it is volume as capping your rate and your download the same volume means you do so for longer. When you have lots of users it averages out. 10 customers downloading 10Mb/s for 1 minute or 10 customers downloading 1Mb/s for 10 minutes (same volume) is the same bandwidth (1Mb/s)...

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  17. Hi, all sounds great. But am I right in thinking I can't migrate to Home::1 without losing my IPV4 blocks?

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