Kitz ADSL Broadband Information
Plusnet Broadband
support site  Support this site
PayPal Donate

site index
site search

adsl bar

CBC/UBC v Standard Based Charging

adsl bar


In mid 2004 BT Wholesale made an announcement that they were changing their pricing structure which encouraged ISPs to either use CBC (Capacity Based Charging) or UBC (Usage Based Charging).

Since this date there has been a massive debate over the pricing structure for CBC and UBC and whether it would be financially viable for ISPs.

Plusnet was one of the first ISPs to officially announce that they were going to be using CBC charging and as a result they were able to lower their prices substantially to make higher speeds available at a price more users could afford.

One ISP rep from another ISP came into the Plusnet forums disputing this saying that this would cause massive problems for Plusnet and that their customers would suffer dreadfully, saying that his ISP would never use CBC. This sparked a massive debate over how much it cost ISPs to provide a GB of bandwidth.

In 2006 most ISPs are using CBC, in general the price of adsl has come down but profit margins are small. The vast majority of ISPs have had to introduce some form or cap or FUP. Ironically even the ISP above are now using CBC and have introduced caps.
[edit to add:- 2006 may be the year of the Squeeze? :/]

Some posts on the subject:-

One from myself:

I was going to do the maths for you to explain how it all works, but i really havent had the time to do so as yet.
Rather than you think me ignoring the question, you can do the maths yourself if you like.
This recent news article states that BTw charges an ISP 52p + VAT per GB transferred across their Central Pipes.
Bear in mind thats the transfer costs... and doesnt say anything about hardware, staffing premises etc.

So lets base this on a medium sized ISP with say 100,000 users.
First of all ISPs need central pipes - these are what carry your data from the BTw side of things to your ISP.
The cost of connecting a single 622Mb central pipe (ISPs will have several of these...)
From the btw price list here
BT Central 622 Mbit/s L2TP Passthrough
28.05.2004 175000.00
So say our medium sized isp will need 5 of these so thats 205,625 x 5 = £1,028,125
Rental costs of a BT Central 155Mb pipe run at £26,350 per month.. A medium sized ISP may have 20-50 of these so say 20 x £26,350 thats £527,000 each and every month.

Then an ISP has to pay BTw £8.40 each and every month for your line card at the exchange for each and every customer on adsl.
They then have to purchase a router to connect their network to BTw's network... and Im not talking the type of router you or I use, but something like this which at an estimate costs £10's of hundreds of pounts if not nearer £100,000.
So add one of those to each 622Mb BTw Central pipe that they have.
These also have to be located at somewhere like one of the Telehouses in London, so add on the telehouse costs (no idea of these).

Then add on their own network costs, routers, servers, (mega bucks again)
Add on the electricity costs to keep a server room this size cool.
(Believe me having been in a server room this size would take some cooling).
Add on premises costs.
Add on staffing costs.
Add on peering costs (connecting to say Level 3 so traffic can be routed around the world).
and any other of the incidentals that I cant think of right now.
hmmm.. yeah maybe I did the right thing in saying ill let you do the maths... its just easier to say "around £1 per GB".


Another posters reply

Just to clarify, BT don't specifically charge Plusnet per GB. The figure of £1 per GB is, and has always been, described as a rough figure taking into account running a 622Mbps central pipe with no contention effect, and also maintaining the rest of Plusnet's network. I have explained where that comes from several times.

A 622Mbps central pipe costs £1.8 million per year = £150,000 per month
Total possible bandwidth throughput per month = 600Mbps x 60 x 60 x 24 x 30 = about 1,555,200 Mbits
Divide by 8 and then by 1024 to get to GB
189,843 GB per month

Add other network costs etc and this is where the £1 per GB comes from.

Quick primer on CBC/UBC/Standard pricing from the Zen Forum...

Okay here's the costs using home 512k lines and a 155MB L2TP central...

Standard Pricing
Cost per end user per month 12.25
Cost per central 3750 per month

Cost per end user per month 8.40
Cost per central 26350 per month

Cost per end user per month 8.40
Cost per central 3750 per month

Peak Usage (based on 95th Percentile usage for the central) 41p / kbps
Which solution works for a company depends on the number of users, the amount of bandwidth they use and, to some extent, the usage patterns of those users when smoothed out.

For more detailed costings see the BT price list.


These days the debate has moved onto the Margin Squeeze test, which is another matter entirely...
A quote from one respected AG poster ...

The top man at Ofcom is ex NTL and he's apparently obsessed with something called a "margin squeeze test" between BTw's IPstream and Datastream services, in order to allow "BT competitors" to make money. Till now, nobody's really cared about Datastream because the ISPs using it were largely irrelevant and certainly not credible BT competitors, and I was a bit puzzled as to why the "margin squeeze test" was important. All is of course much clearer now.....

/snip... It's more about economics and general business competence than technology afaict. In the past there has always been the threat of BT pricing IPstream in such a way that it isn't economically viable to compete; despite my half-joking comments about Ofcom, it is actually *good* news that Ofcom are encouraging others to compete seriously with BT, but right now it's not obvious the end user will benefit

As past examples of Datastream ISPs you could go and look at the Tiscali and Bulldog forums (BD forum is not appropriate for those of a sensitive nature, see recent AG front page news articles on BD).

Or you could wonder why Plusnet dropped DSLconnect (which was an entry level low speed Datastream-based HobbleDSL product which had a short life because as soon as Plusnet sorted out CBC pricing they could offer a better service at lower cost on IPstream)


Copyright © Kitz 2003-
All rights reserved
Unauthorised reproduction prohibited
Valid HTML 4.01 Transitional adsl 60 spacer

|| Broadband || ISPs || Tech || Routers || Site || Wiki || Forum ||

| About | Privacy Policy |

adsl 60 spacer Valid CSS!