The cross subsidisation got completely out of hand. Openreach has actually reduced the cost of WLR over the past 10yrs yet the ISPs have doubled the prices that we have to pay. {Ive included actual breakdown figures many times in the past}
IMHO it was so the ISPs could advertise head line grabbing cheap or free broadband. Most of the big ISPs were guilty hoping that consumers wouldnt notice the cost of line rental.
With the new ASA ruling last October, ISP's have to show the total package cost including LR. Now they cannot advertise such things headline grabbing 'Free Broadband' is no longer as easy to hoodwink the consumer as to how much they pay for LR.
WLR is currently £86.72 per annum (£7.23 pm). The ISPs have very little own costs to add on top of this.
Yet Wholesale cost for WBC
adsl is £5.88. On top of this the ISPs have to pay for bandwidth as the MSILs and backhaul transit OR Host Links and bandwidth costs. Both of these costs are substantial and amount to 100's of £thousands to £millions. Then they also have to buy some hefty terminating equipment such the Junipers. Just a couple of those is nearing £1.5m. Then add on numerous servers and internet transit and finally provision of e-mail and any other addons such as free modem. Broadband requires far more in-house technical staff and a lot more CS staff. Faults and problems are far more likely to occur.
By the time you add on VAT, it doesn't take a genius to work out that adsl for much under a tenner is running at a loss and therefore being cross subsidised.
Its a fact that a lot of people are overpaying for LR and under paying for broadband. There's a few smaller ISP's who do currently align pricing to true cost, such as AAISP or Pulse8 etc, but over the past 10 years practically all of the large ISPs have cross subsidised to some extent or other.
>> All of which is possibly not so good news for all those ranting about wanting a broadband service only and no voice service on their line and now much cheaper it would be!What will happen is that the General Public will expect their bills to reduce by whatever they are paying for Line Rental. If they are currently paying £18-£20pm for LR, then they anticipate that they will no longer have to pay the £18. Yes really!! That is what a large portion of the population are assuming will occur. The more astute know that this cannot and will not happen.
IMHO this is perhaps a move to more correctly re-align the pricing for when the no voice service does become available.
Because of the new ASA regulations for bundling the fee's together as a package, few will notice that although their LR may have come down, the broadband element has increased. If you purchase broadband now, very few sites show breakdown costs eg
BT