Broadband Providers Prepare to Change Billing Models

BROADBAND providers in the UK will radically overhaul the way they bill users in order to control spiralling usage, industry insiders have claimed.

In an interview with PC Pro, Owen Cole technical director at F5 Networks, said that the rise of the iPad had made it far more likely that ISPs would start to charge for data according to device.

Users could be charged varying amounts depending on the type of device they're using for browsing and the amount of data it consumes, in a manner similar to current mobile broadband tariffs.

But while this may be the norm for mobile broadband it would mark a shift away from the fixed-line broadband providers current fixation on speed and 'unlimited' data packages and it's certainly a threat to the 'neutral net', insofar as it exists currently.

iPriority

After the iPad's introduction, all mobile operators offering the 3G version of the device created iPad specific tariffs as its users were expected to consume more data than other devices such as smartphones.

The effect of the iPad however has been to reassure network operators that new devices were capable of driving a huge amount of new data usage particularly streaming video, across both fixed line wi-fi and 3G mobile networks.

The traffic from these devices is identified and billed as iPad traffic.

At present, this doesn't appear to give iPad users any advantages but mobile operators could in theory allow them to pay a small premium for their iPad tariff which would see all their traffic prioritised across the network.

Owen Cole, technical director at F5 Networks said, "The operators said, 'If we have devices that are generating work for us, this gives us the ability to introduce a different billing model.'"

"If things are left to just be driven by market economics, we could end up with people paying for the amount of data that they consume to every device and that would not be a fair way to approach the market."

In other words, it could mean the advent of broadband bills each month itemising normal browsing, emails and the like and separate, higher, charges for streaming video or downloading large files.

These higher charges would be incurred in order to ensure that streams of video and other time-sensitive content didn't get lost among the hordes of web traffic.

Berners-Lee: 'Don't even go there'

There are fears however that further new tariff structures would deal net neutrality a perceptible blow, none voiced more clearly than those of father-of-the web, Sir Tim Berners-Lee.

At a recent government round-table on the issue Berners-Lee is reported to have 'shot-down' BT who argued that the net can self-regulate, a point of view shared by Ofcom and other big ISPs.

Instead, Berners-Lee wants to see a net neutrality goal set by Ofcom and government.

BT, the largest broadband provider in the UK has previously indicated its preference to allow content providers to be charged to offer their services priority over broadband networks.

BT along with the other top five largest broadband providers control around 95% of the UK broadband market.

Campaigners fear that if network neutrality protection is left to the industry to self-regulate it would mean that the biggest networks would be able to exert too much control over web access in the UK.

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MPs to mobile broadband providers: stop 4G auction squabbling

MOBILE broadband operators have been heavily criticised in a report released by the Commons Culture, Media and Sport committee for severely delaying the auction of 4G spectrum.

Last month, Ofcom revealed that it was pushing back the 4G auctions from the first half to the latter part of 2012, after it was unable to settle squabbles between providers.

O2 and Vodafone have both launched legal challenges to Ofcom's proposed rules for the auction, which are meant to ensure that 3 can secure a slice of the tasty, tasty 4G spectrum pie.

"Ofcom has had a very difficult job adjudicating between competing and polarised interests and we are concerned that constant disagreement and special pleading from the four mobile network operators appears to have further delayed the spectrum auction," said the Committee Chair, John Whittingdale MP.

"We believe that the basic rules for the auction which Ofcom has laid down are sensible and fair and that further delays will result in the UK falling further behind in this vital area. The auction needs to proceed as soon as possible."

Grassroots broadband

In addition, the report highlighted the need for improved access to mobile broadband services across rural Britain.

MPs said they found the "imposition of a 95% coverage obligation to be unambitious" and demanded that the target for 4G services be raised to 98% of the population.

4G mobile broadband services could provide a much cheaper solution for rural areas which lack fast broadband services at present and the Government is keen to utilise the format to meet its universal service commitments.

Whittingdale, "We believe that Ofcom needs to go further than it currently proposes by setting a condition that at least one of the new licence holders must achieve 98% coverage across the country."

A spokesman for the Countryside Alliance told The Telegraph that, "The Alliance believes that the current lack of reliable broadband is one of the greatest threats to the growth of the rural economy.

"...the Government should hasten the roll-out of rural broadband, as well as ensuring the sale of spectrum enables the countryside to compete in a growing digital economy."

Using any extra funds to invest into achieving the 98% coverage the report calls for could well be a way to boost rural broadband provision without placing too much burden on any one of the mobile broadband providers.

However, one further issue thrown up by the report is the concern that Everything Everywhere will be profiting from the sale of an asset formerly in the hands of the public.

The Committee wanted Ofcom to ensure that "at least some" of the profit provided public benefit.

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Ofcom to Providers: Rollover on Unfair Broadband Contracts

Ofcom have banned so-called 'rollover' broadband contracts which automatically renew unless customers opt-out.

The regulator had previously indicated that it was concerned that rollover contracts make switching broadband and phone providers harder and more costly or stop consumers switching broadband deals.

As of December, customers won't be able to get tied into another long-term contract without their explicit consent.

By December 2012, those currently on automatically renewing contracts must have the terms of their deal changed.

Approximately 15% of British broadband and calls customers have an automatic renewal which imposes a fine for early cancellation unless the customer has previously opted out.

BT is, by far, the worst offender despite the fact that it's also one of the few providers still clinging on to 18-month contracts.

TalkTalk and Orange have both switched to 12-month contracts recently in an effort to attract more customers.

Paying the penalty

Customers with broadband and home phone contracts will typically have signed up for an initial 12 or 18 month period which then continues on a monthly rolling contract basis after the time is up.

If they then fancy switching to another provider, for example to a cheaper broadband deal, they would be free to do so without incurring a penalty for ending their contracts.

Those on rollover contracts find themselves contracted for a further 12 or 18 month period with the same supplier.

Meaning that, if they want to switch, they'd be liable to pay a weighty sum to escape the clutches of their rollover contract.

Welcomed by consumer groups

Consumer groups welcomed the regulator's ruling.

"Rollover contracts can be confusing and penalise customers," said a spokesperson from Consumer Focus.

In addition, automatic renewal has been found to act as a barrier to consumers who want to switch broadband or landline provider.

Senior policy advisor at Which? Dr Rob Reid agreed.

"We are pleased to hear that Ofcom has followed this policy line, one that Which? supports, despite many major telecoms providers pushing for ARCs to be maintained," he said.

Ofcom's removal of rollover contracts will open up the marketplace, making it more competitive and providing customers with the freedom to shop around.

Ed Richards, chief executive of Ofcom added that the regulator's evidence "shows that [automatically renewed contracts] raise barriers to effective competition by locking customers into long-term deals with little additional benefit.

"Our concern about the effect of ARCs and other 'lock in' mechanisms led to our decision to ban them in the communications sector."

BT bites back

BT has not taken the negativity surrounding its rollover line rental contracts lying down and has fought back saying it was disappointed with Ofcom.

A statement from the telecoms behemoth said, "Our customers tell us that they are happy with the discounts offered by these contracts and we don't believe there is any evidence that they damage competition...We have worked hard to make sure that customers understand what they are signing up to, including how the renewal works and the charges that apply if they choose to leave early.

"In exchange for these terms customers get a significantly lower price and as the renewal approaches we contact them within 30 days of the contract end date."

Julia Kukiewicz, Editor of Choose suggests consumers should weigh up the pros and cons of their broadband contract before signing up.

"Anyone signing up to a lengthy contract of any sort should make sure they consider the options presented to them carefully and ensure that they are aware of not only the potential benefits but also the potential pitfalls of 'rollover contracts'," she said.

"The last thing you want to realise when wanting to escape your current contract and switch to another broadband or phone provider, is that you are locked in for a further year and a half."

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