Friday, 27 October 2017

BT can fine you for getting broadband elsewhere?

OFCOM have announced some changes which seem to allow BT to fine people for getting broadband elsewhere!

Basically, if you have a phone line only from BT, with no call packages, it is likely soon to be available for only £11.99, which is great.

However, if you then come to someone like AAISP for broadband, then BT will hike your phone line price up to £18.99 because you dared to buy broadband from a competitor.

This seems to be a deliberate move by OFCOM, which is really weird as OFCOM actually state "Ofcom also wants to help people who buy a telephone service fromone[sic] provider and broadband from another."

So far on twitter all OFCOM have said is things like "we consider that there is already a highly competitive bundles market offering these consumers better value for money" and pointed back to their web site. They have since confirmed this is what they intend though! It also seems that they clearly recognise that BT will offer a "bundle" which will effectively negate the £7 price hike if you go with BT for phone line and broadband. Also, their tweet makes no sense as "these customers" are those wanting phone line from one provider and broadband from another. These people cannot get a "bundle" for the two because they are different providers. These are the people OFCOM claim they want to "help".

To be clear, we are not comparing "buying a bundle" with "buying separately", which is something OFCOM mention and expect the bundle to be better value, which makes sense. No. We are comparing "NOT buying a bundle from BT" with "NOT buying a bundle from BT". Why the difference in price?

It is no different that saying BT can increase line price if you buy a mobile phone from someone else, or buy a particular brand of washing powder. It makes no sense.

It is also not clear what BT customers, that do not make calls, get for this extra £7/month exactly. After all the broadband side is paid by the other ISP independently. If customer get no more service from BT for this extra money charged then it is just a fine, plain and simple.

Assuming this insanity goes ahead it really is unclear how the actual mechanics of it will work.

It is not clear if OFCOM expect ISPs like AAISP to warn potential customers of the BT fine when buying from us. I doubt the availability checker tells us that this will happen, so that will be difficult. Maybe that will be added to the checker so we can warn people. I can imagine ADR cases over this, and we'll have to start "by buying broadband from us, BT retail will fine you £7/month by way of extra line rental - are you sure you want to go ahead?". I suspect the ASA may even have something to say if we did not include that cost in adverts.

It is not clear how BT will do this in their contract with the customer. I mean, what if a husband buys phone line from BT and the wife buys broadband from AAISP on the same line. Husband won't have broken any contract with BT, so why the penalty? Also what of a case of someone that buys phone line only from BT and their employer buys broadband (from other ISP) on the same line for working at home? Will employer be expected to compensate the employee the extra £7/month in such cases? Will that be taxable benefit in kind or just expenses?

It is not clear how Openreach will notify wholesale line customers when broadband is "attached" to the line so that they know to hike the price. I have not seen B2B/XML messages for that yet. Or will there be a new Openreach service to block ADSL or FTTC being added to a line? That will be tricky when moving line and broadband in one go.

Importantly it is not at all clear how the hell this cannot be seen as hugely anticompetitive and damaging to smaller ISPs that use Openreach lines for broadband, especially those not doing wholesale line rental.

What gets me is the clear and obvious group of people that want a "phone line" only tariff in the first place, i.e. no call bundles, are people that want the line only to support broadband, yet OFCOM seem to try and exclude exactly those people from this arrangement. It makes no sense at all.

Small ISPs without wholesale line rental packages are going to be screwed. And those that try to take it on face a nightmare of R&D for B2B XML and way more if they try to offer calls as well.

What should happen?

It is clear that BT Retail should offer a line only package, as they used to long ago, for people that do not want call bundles. There is a clear need for PSTN lines without calls. The wholesale price for the PSTN line is low - BT Retail can still make a profit offering a line only package with no call bundle.

You could argue that I am, being daft - AAISP offer line only for £10 so we are competing with BT on the line only part, why would I want BT charging less? The simple answer its thinking of out customers who should not have to change line providers if they don't want to.

It is also clear to me that whether or not someone pays another ISP to put broadband on that line (something the other ISP pays BT for separately) should not have any impact on this. Just as the customer's choice of mobile phone contract, or choice of washing powder, should not impact it.

It baffles me, given OFCOMs stated aim to help people buying from multiple providers, why they have not come to the same conclusion.

What are AAISP doing about it?

I am all for competing fairly, really. I fully understand buying separately can cost more, and if we are one part of that then fair enough. I don't mind competing in bundles. But to make it so that someone buying separately not only has the extra overall cost of doing that, but also gets fined by one of the providers, that is crazy and really seems anticompetitive to me.

We already offer a phone line with no calls for £10 inc VAT per month to support broadband from us. So moving line to us and taking broadband avoids the £7/month price hike, which is good. We don't try to compete on price, but the bundle does not work out too badly even so. But why should people be effectively forced to move the phone line part. We offer no calls, so people that want incoming calls or occasional outgoing calls will not find what we offer suitable. We do offer a package to move a BT number to VoIP at the same time, which helps address this in part. But we don't want to force people to move their lines to us if they don't want to.

If we can tell a customer is on this special tariff when ordering, we'll add a warning about the BT fine. I doubt we'll be able to tell though as I don't think OFCOM really thought this through somehow.


P.S. Some more thoughts...

BT have this tariff that is line only, and a condition will be that you must not have broadband on it. I already covered the case of someone else having broadband on it... But...

What if you get broadband from someone via WiFi/WISP or fixed 4G router or even Virgin. Will BT charge more for their line rental in that case too?

If so, that really does highlight how fucking stupid this is.
If not, then really does highlight how anticompetitive this is if a small ISP indirectly stings you for £7/month extra because they use DSL over Openreach lines but a WiFi/WISP does not. How can we compete on a level playing field with that?

Basically the only way this makes sense is if OFCOM consider that ISPs using SMPF and FTTC on a line are not paying their way for that access. Is that really what OFCOM think?

18 comments:

  1. If I have a contract with BT Retail for line only can BTWholesale tell BT Retail if I order Broadband from another provider without breaching Data protection etc.?

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    1. That is, indeed, one of the questions that needs asking. Bear in mind it may not even be BT Wholesale, it could be say TT Business using FTTC via Openreach. Heck, it could be a third party sub loop unbundled company jumping in to the BT cab.

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    2. Well BT seem to think that BT Retail != BT Wholesale != Openreach. So going by their own (flawed) logic it would be illegal for one "company" to give your data to another "allegedly unrelated" separate "company". Right?!

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    3. Quite, but soon Openreach may be separate which makes it even more interesting. I've emailed our Openreach account manager for details of the new messages.

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    4. Openreach won't really be separate though, will it? It will still be wholly owned by BT, no? And it is the owners/shareholders who control what happens in a company, not the Directors.

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    5. I suspect part of BT Group plc, to be honest. No impact on my BT shares basically.

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  2. Adrian - After all these years of dealing with OFCOM you still seem to think that they are there to operate in the best interests of customers.

    They aren't - they are there to operate in the best interests of BT (Retail, Wholesale, Openreach etc) and always have.

    Look at how long they take to "decide" on things that to you, me and the man in the street are so obvious to do. If it involves "hurting" BT then they will prevaricate / delay / call for inquiries before being forced to do it.

    Move along please, nothing new to see here.

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  3. Wow. This seems to be the exact sort of thing Ofcom should be *preventing*.

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  4. Another joke decision from ofcom, ill thought out as usual. It's basically just virtue signalling "won't somebody think of the elderly".

    The whole broadband market in the UK is a mess of poor regulations.

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    1. Seriously, happy for customers to have lower "line only" and no "call bundles" tariff from BT. But WTF has that to do with broadband?

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  5. Re: "It is no different that saying BT can increase line price if you buy a mobile phone from someone else," - I seem to recall that that exact thing could happen with the old "light user" scheme: it was also a reduced rental for people who hardly used their phone, but conditional that had no other telephony service! Getting a mobile broke the condition, and the rental went up!

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    1. Indeed, that was a silly mess aa well. This is not a social tariff though (AFAIK) but addressing that BT forces you to have a call package you don’t want. And the biggest case for that is people who only have a line for broadband!

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  6. It's been clear for a very long time that line rental has been subsidising broadband - Wholesale prices drop and yet line rental (with compulsory call packages) has risen to a ridiculous price point. This has had an awful knock on to people who just want a phone line and have no need for broadband or unlimited calls.

    Why didn't OFCOM address this imbalance correctly and impose a cap on the rental element and make call packages optional? Broadband prices from the main providers would inevitably go up but the net effect would be that users of packaged services would be paying a similar amount to now but light users would be significantly better off.

    What's the point of having industry regulation if it isn't there to protect consumers...

    Worst of both worlds now for the reason's that Adrian outlines!

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    1. I’d agree except that the change here is entirely at retail BT retail level. With Openreach split the costs for PSTN and the access to that line for Broadband remain the same still.

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    2. For a long time, it was actually the other way round - BT were making a loss on every "line", making up for it in excess profits on calls and broadband. Perhaps that's finally been fixed now, so line rental actually covers the line costs without a cross-subsidy from inflated call charges, but I wouldn't bet on it.

      The rental price *is* regulated, and call packages aren't obligatory - indeed, the host of this very blog offers a 'line only' service with no calls at all!

      The root problem here is that providing and maintaining a copper wire, possibly multiple miles long, is actually an expensive job - whether you pass any calls or data over the wire or not. I know some people think it should be cheaper if you don't use it much: have you tried asking Ford if you can pay half price for a Mondeo you're not going to drive much? It doesn't cost any less to make!

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    3. Indeed, and BTs push to try and charge people for fixing faults is simply not on either. They need the price at the Openreach level for the wires in the ground to cover the cost of making that work. How hard can it be to get that right, really?

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  7. "the only way this makes sense is if OFCOM consider that ISPs using SMPF and FTTC on a line are not paying their way for that access. Is that really what OFCOM think?"

    What's the cost per end user these days of SMPF vs the voice side cost? Assuming it's not hugely changed in the last few years, I could well believe that SMPF access is in a sense underpriced, and always has been.

    A voice-only service could work for years over an Openreach copper pair without intervention, and if it breaks it's usually relatively easy (ie cheap) to diagnose and restore. The significance of maintenance+repair costs is minimal.

    A broadband service over the same wiring (with its own equipment) is far more sensitive to the state of the equipment and wiring (both Openreach's and end user's).

    Basically, if someone sneezes in the wrong place the broadband service will degrade or fail, and diagnosis and restoration of service will cost far more than is sensible.

    Part of the reason it's so expensive is because of the complete and utter brokenness of the end-user->ISP->Openreach interfaces for fault management purposes, and the failure of Openreach to have appropriate diagnostic technology in place to manage millions of end user voice and broadband installations properly and cost effectively.

    Broadband-specific diagnosis and service restoration must be costing BT/Openreach a small fortune. Maybe it's costing a large fortune, given the number of repeat visits I see for faults that *should* have been fixable first visit, given sensible processes and technologies.

    When BT are both wholesaler and retailer, it doesn't actually matter which piece picks up the cost of diagnosis and repair.

    When BT/Openreach are only the wholesaler, and someone else is the service provider, the wholesaler cannot currently pass on the cost of broadband diagnosis and repair to the ISP (though as readers here will know, they do often try quite hard). So in that sense, SMPF is probanly arguably underpriced (assuming one accepts that BT/Openreach in its current state are, and likely always will be, incapable of designing and cost effectively managing the operation of a national broadband delivery network).

    So BigBT's people have now found a way to get an extra few pounds a month into BigBT to cover BT/Openreach's inability to do cost effective broadband fault diagnosis and repair.

    Or have I misunderstood?

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    1. Well compared to how it was they are not making extra as they are being force not to rip people off with call packages they don’t want (unless they have broadband). But with the Openreach split they cannot really argue that this is anything to do with SMPF access being under prices as this makes no difference at the Openreach level.

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