Tuesday, 24 May 2016

The 20CN dilemma...

[See also 20CN reprieve?]

Back at the turn of the century BT were deploying ADSL (broadband) equipment for the first time. Back then the equipment used ADSL version 1, with service profiles allowing 500kb/s, 1Mb/s and 2Mb/s. BT did a good job covering the many exchanges in the country even the smallest and most remote.

Since then, things have changed. 20CN allowed speeds up to 8.128Mb/s sync (7.15Mb/s IP throughput) with BT's "max" product and then came newer technology - BT's 21st Century network with new BRASs in the exchange equipment using ADSL2+. This offered sync speeds of 24Mb/s (21Mb/s IP throughput). The older kit was then called 20CN, and for over a decade BT have been upgrading exchanges to 21CN.

Now we have VDSL (FTTC) which is even faster with equipment in the street cabinet, but the fallback for all those lines not equipped with FTTC, or on direct exchange lines is still ADSL using 20CN or 21CN.

For as long as BT have been upgrading 20CN exchanges to 21CN, we have been moving customers to 21CN (free of charge). Even when BT were dragging their heels, if Talk Talk had kit (which is all 21CN / ADSL2+) we regraded people from 20CN to TT (free of charge). There are even a handful of cases where people can even go from 20CN to FTTC (but not to 21CN or TT).

The problem

The problem is that the upgrading of exchanges is taking a long time, and so there are a lot of very small exchanges with 20CN kit as the only option. The problem is made worse by the fact that BT charge a small fortune for back-haul for 20CN circuits. To put it in to context I could pay a transit provider that will guarantee no packet loss sending packets to thousands of interconnect points around the globe at a rate of under £1/Mb/s/month, but BT charge £138/Mb/s/month to send packets "best efforts" to a few hundred 20CN only telephone exchanges in the UK.

The big issue is that we have now got to the stage, after the latest batch of 20CN to 21CN regrades (which was around 1/3 of our remaining 20CN lines) that 20CN is making a significant loss for us.

We have worked out that on average, what we pay BT for the ADSL line and the bandwidth, is now around £60/month (plus VAT) per 20CN line. We have customers paying only £20/month on our older units tariff, £25/month on Home::1, and as little as £12.20/month where it is an extra line on units tariff. Yes, we do have people paying more for higher usage, but it is clear that overall we are now making a serious loss on the few hundred 20CN lines we have left.

We have to do something...

Abandon 20CN?

One solution is to abandon 20CN lines. For now, I have stopped sell on 20CN circuits, but if we find an alternative solution we may lift that. A simple solution would be to give customers a month's notice that we are ceasing their 20CN service, giving time to migrate to another ISP if they want. Many ISPs have stopped 20CN for the same reason.

This would be simple, but not very nice to customers.

Run 20CN as a non profit?

Another idea we are floating is that we make 20CN non profit - sell at cost price. The idea is that each month we would take the total bandwidth cost divide by number of lines, add the tail cost and advise people that for the following month that would be their price. Even publishing the figures clearly.

This would only cover the back-haul and ADSL line costs we pay to BT, not a share of the BT interconnects, or costs for running our network or transit or staff or anything else, so it would be very much the lowest tangible element of cost and selling as "cost price".

The issue is that it is likely to be around £60/month (plus VAT) per 20CN line now, and that can really only get worse. Obviously when usage drops, as people leave, the cost of back-haul goes down, but so do the number of lines. The end game would be one line left, getting 7.15Mb/s throughput and costing, to allow for 8Mb/s back-haul, £1,104 per month, plus VAT. That would be crazy, but so would us paying that for one customer that pays us £25/month - so a line has to be drawn somewhere.

What should we do?

Which of these ideas make sense, or are there other options? Very keen to hear feedback on this.

Obviously if BT have some sudden plan to update all remaining 20CN only exchanges in one go in a few months, we'd be prepared to wait. I doubt that will happen, sorry.

P.S. Notice..

Whatever we do we have to let end users know in advance, but I am not sure it makes much odds if one month, three months, or six months. At the end of the day, either you are able and prepared to move to another ISP or cease service, or you are not. If you are, you only need 2 weeks notice to migrate so a month gives 2 extra weeks to decide. If you are not, then when you get cut off, or whatever we do, does not make much difference apart from how long we spend losing money. As such, whatever we so, I suspect it will be with a clear calendar month's notice.

25 comments:

  1. I've always assumed A&A was about fairly relaying costs (plus some profit, of course!) so I'd vote for the no-profit plan, or even a related profitable plan.

    Perhaps give people plenty of notice and chance to leave.

    ReplyDelete
  2. The least worst option is the non-profit. I think maybe the best is just to give a long notice and cease offering that product.

    It is less than ideal but I would suspect that at the cost level you would have to charge for the non-profit you may find a lot of people chose to leave and thus push the price up at an early stage anyway, negating the work put in to run the non-profit side.

    On a wider point it is awful on BT's side that the have allowed this situation to occur. It is blatant profiteering.

    ReplyDelete
  3. Curiously enough my exchange is one of those usual ones where FTTC is offered (to non-exchange only lines), but the only ADSL choices are 20CN and TT (thank goodness). It does make me wonder whether OFCOM could be persuaded to step in and force BT to sell 20CN backhaul at a peppercorn price in exchanges where 21CN is not available. Nothing quite like a profit motive to incentivise BT.

    ReplyDelete
  4. Abandon 20CN, giving a reasonable amount of notice (maybe three months). Then offer affected customers cheap L2TP service if they want to keep their IP ranges/service until such a point as their exchange is upgraded to 21CN? Maybe then free migration back again?

    ...and make it very clear that it's BT that's forcing this with the rediculous prices.

    ReplyDelete
  5. I had to wait a decade to get off 20CN. I only just escaped in time, so it seems. Bring in Ofcom and the politicians. I agree with Technical Vault.

    ReplyDelete
    Replies
    1. Cecil, I think I remember you saying you were on Skye? Is that correct?

      Delete
  6. Notice that you will be ending the service as currently-priced for all in three months.

    Offer free L2TP access service for three months to departing customers, so that they can keep the static IPs / no filtering etc.

    Those who want to stay after the there months pay the new, non-profit pricing, on the explicit understanding that their bills are likely to rise as people leave the service.

    ReplyDelete
  7. It's staggering that BT are being allowed to charge as much as they are for 20CN backhaul :(

    ReplyDelete
  8. Sod the non-profit. People won't thank you for it, and it'll just be a burden. Seriously, if you imagine people will be grateful for you keeping them in place, you're misguided. A few will be, but the bulk will forget this goodwill when something goes titsup. Just cut their lines.

    ReplyDelete
  9. It seems like BT retail can offer the service for ~£30/m with "unlimited" bandwidth and a land line, can you then subcontract the service to them and only take a small loss each month. I appreciate its not ideal but failing that terminate the service with a months notice.

    ReplyDelete
  10. How about contacting all your customers on 20CN and asking for their opinion, then do what the majority prefers?

    ReplyDelete
  11. As one of your loyal customers whose only option is 20CN, this post both worries and surprises me. I had no idea that I was not paying my way, and those comments that say "just cut them off" obviously don't appreciate the life-line that a slow but ultimately reliable and stable connection gives to me, a home worker. I can't see how Ofcom are allowing BT to 'get away' with this pricing. I'm not qualified to offer a solution. Obviously I'd prefer it if you kept subsidising me, and the light at the end of the tunnel for me, is that upgrade work has just started on my exchange (ESCLD). Believe me, I'll be the first to upgrade to FTTC when it's available.

    ReplyDelete
  12. This will affect a friend of mine who moved to you as an ISP recently.

    Running the service "at cost" would be fair but, I suspect, too expensive for most customers. Running it as a loss making service is almost certainly not viable for you - the potential downside assuming your "end game" scenario were replicated over multiple exchanges each with one customer is a loss to A&A of 10's or even 100's of £k per month and I doubt you could sustain that.

    Transparently moving to another ISP (probably BT in most cases) and maintaining the customer's current A&A service over L2TP as previously suggested sounds like the least worst option.

    Failing that I can only see that you will have to stop supporting 20CN lines.

    ReplyDelete
  13. Please don't abandon 20CN - I have a customer with 2x 20CN lines through you on an exchange with no other option. Surely the real question here is why has BT not rolled out 21CN as they promised to?

    ReplyDelete
  14. BT needs to be forced by Ofcom to offer a _uniform service rate_ to
    ISPs, regardless of which exchange is involved. That way, already disadvantaged users will benefit as BT is incentivised to get on and upgrade the last exchanges.

    ReplyDelete
  15. When did this situation develop, btw?

    ReplyDelete
  16. Thinking about this more overnight. Could you mandate that I take additional services and blend your margins? I already have your phone line. Could you extend my contractual period after FTTC becomes available to help repay some of the lost revenue? Ultimately the more I think about it though, BT should be charging a flat rate, no wonder the commercials don't stack up for upgrading a 20CN exchange!

    ReplyDelete
  17. Is there a way you could white label a BT/whoever else service and run the customers over your own network, perhaps via L2TP, so that people can keep their IPs etc?

    ReplyDelete
  18. Could you form a consortium of ISPs in a similar situation in order to essentially combine your number of installed lines so that the cost works out more sensible?

    ReplyDelete
  19. See also the discussion on the Kitz forum, at http://forum.kitz.co.uk/index.php/topic,17839.0.html

    ReplyDelete
  20. As someone who's just got under the wire (upgraded to 21CN last week) I'm 'Alright Jack' but would completely understand if A&A decided to cease 20CN.

    Putting the plain figures as you have, I can't see that 20CN users could fail to see your position.

    Of course, if there was some bloke involved with A&A with a penchant for 'doing the right thing' and felt like engaging with OfCom/Parliament and arguing that these BT charges disenfranchise (mainly) rural users... :-)

    ReplyDelete
  21. There needs to be an enquiry as to how BT can get away with this. I'd be arguing it if I was in your position. It really isn't on to have people stuck on this "no option expensive" service at your cost.

    ReplyDelete
  22. OfCom need to step in because BT are not operating a level playing field - one part (OpenTrench) are screwing things up for third parties, while another part (BTretail) can carry on offering cheap deals that none of the third parties can.

    ReplyDelete
  23. Could you not migrate the remaining customers to another provider with more 20CN capacity to get better economy of scale like Zen or MurphX/Daisy? (Or even in a worst case perhaps something like BT CentralPlus, then L2TP tunnel back to you?) At £60/month and rising, I think something will have to change there.

    I'd optimistically assumed BT were just migrating all the exchanges to 21CN so it was just a matter of time, but with the likes of TTr dropping 20CN customers entirely (selling them to Daisy's retail arm, Fleur) perhaps the worst cases will be left squeezed on the most expensive package instead - market segmentation, rather than a progressive rollout?

    What's your BTW account manager told you about these exchanges? Are they "20CN forever" now, or is there a strategy to phase 20CN out entirely?

    ReplyDelete
  24. As a customer for about 9 years (in multiple locations all over the country), I'd really hate to see the service go, and be stuck with using BT as my only viable option. The local area has just had fibre cabinets installed, and I'm now connected to a cabinet (but still no FTTC available), so this may end up not being much of an issue for me if the switch-over occurs quickly.

    I can't see how OFCOM has let this run on? We always seem to skip a technology generation (still running on GPRS for mobile here as well, so that's not a viable option). It's an obvious cash cow for BT and makes upgrading the exchanges less 'economically viable' as they'd lose out on the extortion racket.. I mean extortionate rate they have. I'd suggest a letter to OFCOM & local MP/MSP but I doubt that'll get anywhere.

    ReplyDelete