Broadband and Mobile Companies annual increase

LokiGinge

HI,

Does anyone agree that as nearly all of the mobile/broadband providers now have the standard clause of CPI+3.9% typically, that a monopoly has been created?

Given lockdown their profits must be at a reasonable level?

Could MSE start a campaign against this?

Jenni_D

It's not a monopoly as such, but it is an action like that of a cartel - all agreeing to do the same thing (thus try to harmonise pricing and stifle competition).

JJ_Egan

Contact MSE if you want a campaign , this is just a forum .

400ixl

They aren't all increasing the same though, so not a cartel as such and seeing as there are multiple providers involved it isn't a monopoly.

ID Mobile are RPI only
O2 & Virgin Mobile are RPI + 3.9%
BT, EE, Plusnet, Vodafone are CPI +3.9%
Three are 4.5% regardless of RPI / CPI I believe
Sky Mobile and Tesco Mobile I don't believe are increasing price
Some others also only do it on rolling contract terms

What has lockdown got to do with their profits? They still have the same fixed assets and if anything with people being at home more and therefore on wifi they may well have reduced the package they have to a smaller data allowance for example.

On the broadband side, their costs are increasing with more demand for backbone capacity as more people use streaming services at higher quality.

They are all going to increase their prices each year, so what do you want from a campaign?

JJ_Egan

As above and ISP have varying contract prices .

littleboo

For it to be a cartel, they would have to be fixing the price, not the price rise. Two separate things

southsidergs

LokiGinge said:

Given lockdown their profits must be at a reasonable level?

I'm interested to know why you think profits are good purely because of lockdown as well tbh

Jenni_D

littleboo said:

For it to be a cartel, they would have to be fixing the price, not the price rise. Two separate things

Perhaps you need to read what I wrote a little more carefully. I didn't say it was a cartel, I said it was like a cartel.

littleboo

The situation is not  "like" (similar to, having the same characteristics of) a cartel (all agreeing to do the same thing to thus try to harmonise pricing and stifle competition). There is no suggestion of collusion. So its neither a cartel, or like a cartel

HaroldWren5

Jenni_D said:

It's not a monopoly as such, but it is an action like that of a cartel - all agreeing to do the same thing (thus try to harmonise pricing and stifle competition).

Exactly. The only way that the cartel gets broken is if an Aldi effect happens in the Broadband market. Some player (ideally several) has to enter the marketplace and state a contract is a contract and the price stays the same. After that if someone is willing to accept lower margins, or just run a better operation with good customer service, the market will be better. Ultimately, the sooner the transition to FTTP happens, the better since it is more reliable regarding a consistent speed. At that point the unique selling point will be customer service, and price. 

HaroldWren5

400ixl said:

They aren't all increasing the same though, so not a cartel as such and seeing as there are multiple providers involved it isn't a monopoly.

ID Mobile are RPI only
O2 & Virgin Mobile are RPI + 3.9%
BT, EE, Plusnet, Vodafone are CPI +3.9%
Three are 4.5% regardless of RPI / CPI I believe
Sky Mobile and Tesco Mobile I don't believe are increasing price
Some others also only do it on rolling contract terms

What has lockdown got to do with their profits? They still have the same fixed assets and if anything with people being at home more and therefore on wifi they may well have reduced the package they have to a smaller data allowance for example.

On the broadband side, their costs are increasing with more demand for backbone capacity as more people use streaming services at higher quality.

They are all going to increase their prices each year, so what do you want from a campaign?

Yes, Tesco Mobile are not increasing prices in the mobile phone space, and Cuckoo aren't in the Broadband space. Basically the contract with them is a fixed price (which I would have thought should be the case with all of them!). I cannot imagine a customer would get away telling an ISP - "I will pay you £50 a month, minus the RPI, minus 5% every March, and minus my administrative costs every December."

I would have thought the Broadband cost should come down since Openreach (the wholesaler) have REDUCED their wholesale price as part of their Equinox deal last year. So frankly an ISP - all things being equal - would be increasing their profit margin by increasing the price at this point. The cost of their rental to the wholesaler has not gone up. Other costs maybe, but as far as their line rental goes, it has gone down.