Maybe we can extrapolate based on line rental prices?
Once the page has loaded click on WLR Pricing and click on 1.1.2 Line Rental Prices.
The cost price of Line Rental is currently £98.81 per year (includes VAT) which works out at £9.88 per month (includes VAT). EE are charging £14 per month (includes VAT) so we're looking at a ~40% mark up.
EE charge £5 per month for the cheapest Unlimited WBC, this is without any offers. This £5 price is what everyone would pay if they were out of contract in 12 months time unless a price increase occurred but that is unlikely to happen right after the minimum contract term.
Is this £5 per month a loss leader??? I find it hard to believe a company could take on millions of customers at a loss and especially as after the 12 months it is unlikely EE would be able to increase the price very much! The £5 must include some mark up surely? I read that EE has almost 30 million mobile customers and you can bet a large number of these customers will be taking up the half price broadband deal. It's a no-brainer.
Based on the Line Rental pricing and mark up of 40% we could figure a cost price for Unlimited WBC of around £3.60 per month (includes VAT). EE have offered me a special offer of £2.50 per month so is it a loss leader of £1.10 per month?
BT charge me £29.40 for Unlimited WBC and anytime calls. The cost of anytime calls is unknown to me but for this example we will assume it is £4 for now which is probably way over priced. So £25.40 for Unlimited WBC and we've extrapolated a cost price of £3.60 so a mark up of £21.80 which is more than 600%!
Obviously the costs are a lot more complex than the crude example above but the cost to the customer figures are useful when trying to work out what is going on. The £5 per month for Unlimited WBC does mean something! No company can sell a product at a loss for a sustained period so for EE it does appear that they can provide Unlimited WBC to their customers for £5 per month! This is a fact because they are doing it right now and they will be doing it in 12 months time and it wouldn't make sense for them to do it while losing money! That would be stupid!
Obviously the deal regarding the LLU hand over to BT is complicating things but it still comes down to no strings attached £5 Unlimited WBC broadband.
I just had a thought. What if BT realised they could do this LLU hand over deal with Orange and allow EE to charge their new broadband customers a lower price, BT can make up the difference because they already overcharge their loyal customers and that extra we are paying is now used to balance the lower cost EE is charging it's customers!
However I am now left wondering why would BT want EE to succeed in the broadband market??? Oh wait I might have the answer, it would help kill the broadband market by allowing two massive broadband companies to dominate the market and the other broadband companies would be left scrambling for the scraps???
No that can't be it! Disregard that, I think I might be onto something. There are LLU companies out there who are hurting BT a lot for example Talk Talk! BT can't compete with Talk Talk because if they did their revenue and of course their profits would drop massively. BT want to continue overcharging their loyal customers while gaining new customers at the prices the LLU providers are charging!
BT now have a means of taking revenue and therefore profit from the LLU providers. EE are doing it right now for BT and BT can still overcharge their loyal customers because well most of us don't check prices! I am betting they didn't expect this to get out so quickly. Am I right???
IS IT POSSIBLE THAT BT AREN'T CONTENT WITH RIPPING OFF THEIR LOYAL CUSTOMERS? ARE THEY LOOKING FOR MORE OF THE PIE AND HAVE MADE A DEAL WITH EE TO TAKE CUSTOMERS AWAY FROM THE LLU SUPPLIERS???