600% increase in BT Wholesale WBC and WBMC FTTC and FTTP Cease charges
Notification of changes to WBC and WBMC FTTC and FTTP Cease charges
A reliable industry source has just told me that BT Wholesale are increasing their Cease charges for Market B Wholesale Broadband Connect (WBC) and Wholesale Broadband Managed connect (WBMC) Fibre to the Cabinet (FTTC) and Fibre to the Premises (FTTP) products with effect from the 1 September 2015. Market B if I recall correctly is where there is more than one competitive broadband provider or where BT has more than 50% market share.
The pricing for WBC and WBMC FTTC and FTTP End User Access (EUA) Cease charge increases from £5.31 to £31.52. Market B is where most of the business is. The reliable source can’t see any corresponding price increase from Openreach so they say this looks like BTW generating some additional gross margin.
The question is whether this charge gets passed on to end users. It represents a significant chunk of change considering the amount of churn there is in this game – 12% in 2013/14 according to my source. Not surprising churn is this high considering the amount of up front cash being dangled in the biz for new subscribers. I guess this churn must be adding to BTW’s overheads.
It would appear (alt image here) that BT themselves are going to charge £5.50 which would suggest that they are taking a hit – they surely must have to carry the same costs as BTW (or their customers).
I can’t believe the charge does get passed on by most consumer ISPs. There would be uproar. It would surely be anti-competitive. You’d be taking your sign-on bonus from one ISP and handing it to the one you’re just leaving.
This price increase certainly puts a bit more of a squeeze on the customers of BTW. It’s a fine balance they have to strike. BTW will need to show profit and if their costs rise they need to put up their charges. But they also don’t want to stop their customers from growing by being too expensive.
Smaller ISPs can’t keep up with the pricing of the big consumer players and have to sell on service levels. In my time at Timico we bought quite a few small ISPs specifically to bulk up the broadband customer base and gain scale. There are other reasons for doing this – we were able to up sell our other services into the acquired customer base (leverage the base to use a somewhat corny business term).
This increase in Cease charges is certainly an incentive to look after your customers.
Anyway that’s it for now. I’m not sure I’m that interested in this kind of fine business detail – changes to WBC and WBMC FTTC and FTTP Cease charges – but it does have the potential to cause a bit of a stir.