Christmas cashflow shock for UBS providers

Providers not notified of bumper bills

A billing cycle realignment for Telecom's Unbundled Bitstream Service (UBS) is creating Christmas cashflow headaches for providers, with some saying they were not notified of the bumper bills by their account managers.

The new Singleview billing system provides for a single charging period for UBS customers' broadband rental and usage. This will make things simpler for ISPs, according to Chris Dyhrberg, Telecom's head of wholesale marketing.

However, the changeover means ISPs' bills for November were adjusted upwards, leaving some providers gasping at the size of the increase.

Dyhrberg says the one-off bill change won't create a cashflow issue for most ISPs. If any ISP experiences a problem, Dyhrberg says they will work through the issue.

Seeby Woodhouse, managing director of Orcon which pioneered UBS resale in New Zealand, says his ISP was hit by a "six-figure increase" which cannot be passed onto customers. However, Woodhouse isn't concerned as he is confident Telecom will ease the billing pain for Orcon.

The billing changes were announced by Telecom during its broadband roadshow "some months ago", Dyhrberg says. Most of the main industry players were present at the event, Dyhrberg claims.

Telecom's Wholesale Informer newsbulletin also spoke of the billing update in October and warned that ISPs could expect 1.2 to 1.4 times large bills than normal. However, some providers say they didn't receive a copy of it. Maxnet's managing director Brett Herkt says the provider never got the Wholesale Informer.

Confirming what Herkt says, Ihug's general manager of industry and regulatory affairs David Diprose says that while his provider's account manager gave adequate notification of the billing alignment, other ISPs weren't told. Telecom wrote the Wholesale Informer, Diprose says, but didn't send it out to providers until after it had made the changes and the large bills had gone out.

For Maxnet, the increase is around $60,000 Herkt says, but adds that he has heard of ISPs being billed $200,000 more than usual. This, Herkt says, was a "nasty surprise" and a "shock".

Herkt, who is also the Telecom Operational Support Working Group leader for the Internet Service Provider Association of NZ (ISPANZ) industry association, says he has received a fair amount of complaints from members over the billing changes. He is encouraging ISPs to approach Telecom for relief saying that Maxnet will also ask for leniency on payment terms for the increase bills.

While Herkt says the billing realignment brings benefits such as eliminating charging overlaps when customers transfer from the defunct JetStream Partnering Programme (JPP) to UBS, the timing is unfortunate. Profitable dialup bases are eroding as customers migrate to broadband which currently has unsustainable margins, Herkt says.

Furthermore, moving customers from JPP to UBS means ISPs are dramatically increasing spend and thus incurring higher payment guarantees to Telecom as well he says. Telecom requires ISPs to guarantee three months' worth of customer billing before it will provide UBS.

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