I saw an interesting post on twitter about this.
I had posted about the fact that our pricing is (and always has been) based on days of the week and not whether they are a public holiday or not. The exception being that we usually do a special Christmas rate for that week. Apparently the post was condescending, and I do apologise for that. It is a tad frustrating handling some of the questions we get on this, and we really do try to make it crystal clear how the charging works. We are not trying to trick people, and there are a lot of industries and services where pricing is not affected by public holidays.
We do close sales, accounts and support over public holidays, but that is mainly for the same reasons we only work 9 to 5. Getting engineers out on public holidays is almost impossible, so taking calls outside normal working hours is not usually going to help fix a problem any quicker. Various people are working during the weekend anyway, and we do have support on irc by various staff giving their own time. We also have people ready to handle any major outages whatever the time. So it is not that we are not working.
But one comment was that our pricing is unsustainable because of IPTV. This is an interesting view, and got me thinking. It is not, as suggested, why the posting was made. To be honest, that was to try and make sure people did not make assumptions and regret it later - I was trying to help, honest.
IPTV means there is now a gradual increase in the usage of broadband lines. More and more people are starting to do some streaming and downloading of video that did not before. This is an issue in the industry, obviously.
One of the main problems is that back-haul from a customer premises to a handover point in the UK costs 10 times what connectivity from an ISP to the rest of the world costs. Yes, it seems crazy that a company that only has to link a few hundred exchanges in a small geographic area charges so much more than companies linking thousands interconnects all over the globe.
However, the upshot of this is simple, IPTV is increasing costs for ISPs. It does vary from ISP to ISP and depends how they connect to customers. Some ISPs with exchange equipment are in a better position to cope, those using BT back-haul are not so much. But either way, it means people spending more upgrading links from exchanges. That does cost money.
So that leads me to ponder what is a sustainable pricing model for an ISP. One where prices relate to costs in some way (like us), and increased usage (because of IPTV or otherwise) means both increased costs and increased revenues... Or, a business model where price competition drives prices down, and ISPs offer "all you can eat" services where IPTV increases costs.
What do I think? Well, I am not an economist, but I think that this all puts pressure on the back-haul links and their costs. I think competing on price is less sustainable, to be honest. Transit costs have plummeted over the years as usage has increased, but back-haul has reduced more slowly. What I hope is that pressure on the back-haul pricing means that it gets a lot cheaper. That means we can lower our prices to customers. Even so, I don't see us competing on price - it means compromising far too much on other aspects of the service, and means potentially running an unsustainable model. We intend to stay in business.
Eventually, back-haul links will be high enough capacity for fixed pricing models to be viable. When that happens we will offer them. Having said that, we are trialling some interesting options for businesses even now, with much more affordable, fixed price, all-you-can-eat Internet links using FTTC and Etherflows. They are not cheap enough for residential use yet, or rolled out to much of the UK yet, but we are getting there.
So, sorry if my status post upset anyone - I was trying to avoid the calls on Wednesday with people asking why their usage is so high when it was a public holiday.
I hope everyone has had a good weekend (we all went to the zoo yesterday, 10 of us).
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