Analysis of KC Wholesale Prices

[dylan]

It's a regulatory requirement for both BT and KC to provide details of their wholesale prices. BT's prices are rather easy to find - they're located quite sensibly at www.btwholesale.com. KC's prices however aren't as easy to find - but after a little bit of digging I found their wholesale pricelist here. (Seems to change intermittently so choose wholesale > IP Line Services from the left hand menu).

Now then - if we've got any telecomms people here (as it's a techie document, and mightn't mean much to non-techies), and if anyone wants to have a look at the prices for btwholesale and the prices for KC, why not try chalking up how much it'd cost for a business to operate an internet service in Hull, and if there is any profit in it for them.

Although I'm pretty techie, I don't come from a telecomms background myself so I may be wrong, but as far as I can figure from this document a business would require the Karoo IP Line service and connect it into their own network termination equipment (so the cost of the IP Line rental stuff isn't the entire cost).

What do you think folks?

[Fastethernet]

Hi everyone, this is my first post, please be gentle.

Just to be clear I am not a telecoms engineer although I do have some professional experience of dealing with ISP’s and network management.

What I can fathom from these figures are as follows;

10Mbit link to KCOM ATM network   
£16,450.00 Connection charge
£19975.00 Annual rental

512/128kbit
£40.00 Connection charge
£162.15 Annual rental

Using a 50/1 contention ratio (which is very harsh) you could run 1000 users through the KCOM 10Mbit link. If you spread the annual line rental plus off set the connection charge over three years the end user would be paying;

16450 / 3 = 5483.3 (connection charge)
19975 + 5483.3 = 25485.3 (annual rental + connection charge)
25485 / 1000 = 25.46 (KCOM costs divided by users)
25.46 + 162.15 = 187.60 (spread cost of operation plus users annual line rental)
187.60 / 12 = 15.63 (annual cost spread over 12 months)

Total = £15.63 per month

To put this in perspective you might have paid for the full ADSL network interconnections you still need an internet pipe to push all these users through, not to mention all the hardware you would need to supply the service, rent, utility bills, staff costs etc….. All of these costs would push the price up for the consumer. I cannot see this presenting any real business opportunity other than for KCOM to line the pockets.

This service still involves using KCOM ATM network, which isn’t local loop unbundling.

P.S. Can I have some extra points for showing my working out? 

[dylan]

Hi there fastethernet.

Thanks for taking up the challenge and looking at these prices for us. for showing your working out you revieve a gold star 

So, (says Dylan pushing his luck somewhat....) how does this compare with the service that BT Wholesale offers resellers?

Looking at this figure by itself however I really can't see how anyone could possibly compete with Karoo on these prices (especially as you say, as the cost is then further inflated by internet backhaul and revenue charges).

I can't find a service this crappy, oversubscribed or expensive in the country!!!

[miken]

Why dont Karoo appear to offer links above 10MBps on the wholesale site?

Also, do the products work like this,

You pay X for a pipe (10Mbps)
Then Y for each connection (monthly rental)

Than Y uses bandwidth from the pipe (10Mbps)

So if you had 1000 users they would all be sharing 1x 10Mbps connection?

[Fastethernet]

Hi Miken

Yes those 1000 would be using that 10Mbit pipe, just like all ISP's the service you receive is shared between a number of other people. All ISP's use what's called a contention ratio normally somewhere between 20/1 50/1. That means if you pay for an 8Meg line there are between 20-50 other users competing for that bandwidth with you. ISP's expect their customers not to use the full bandwidth all the time and if you do use too much bandwidth the old fair use policy gets trotted out.