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 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...
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.
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.