Altnet vs BT Wholesale ISP's (pricing)

How are Altnet ISP's able to offer relatively cheaper FTTP internet vs BT Wholesale based ISP's ... without the midyear RPI increases etc...?

Good question.

I think this may be because BT are looking to maximize immediate profit, whereas altnets are looking to maximize their value as ongoing businesses.

You forgot Ofcom in that equation! 😁

Alnets don't have a long term survival plan, other than trying to build a limited market share and then consolidating.

Altnets need to make a land grab before the oil state venture capital runs out, and competing on price is the decision they have made in order to achieve this.

In reply to a post by jpm:

Altnets need to make a land grab before the oil state venture capital runs out, and competing on price is the decision they have made in order to achieve this.

Agreed, a quick return, then flog the lot to someone else.

As stated , it’s a ploy to get customers signed up , chances are they lose money on every sign up , but if the price were not cheaper than the incumbent then their take up would be even worse than it is now.

Edited by Iniltous (Wed 29-May-24 14:12:47)

The established big boys could afford to not do the annual RPI + x% increase, but they choose not to as a business decision.

I think the best answer I would give to your question is the companies are in different places in terms of their development.

BT, VM etc. are established big known brands who will want to maximise profit for their shareholders, the long contract lock in combined with these increases facilitates that.
Whilst someone like Yayzi, they will want to maximise growth, so will forego profit per user to try and achieve that. I agree with earlier replies many of the altnets seem to be planning to be flipped.
There is providers on the middle ground like AAISP, Acquiss and Idnet who wont increases prices during contract. (or in AAISPs case even out of contract), but they may have higher prices as a starting point.

Edited by Chrysalis (Wed 29-May-24 18:01:53)

In reply to a post by Chrysalis:

The established big boys could afford to not do the annual RPI + x% increase, but they choose not to as a business decision.

I think it's the other way round. The established big boys never did annual RPI + x% increases. But as soon as one did, the others had to follow.

This is because that formula distorts the price seen by the consumer at signup time: instead of saying "£27 per month" they can say "only £25 per month! (*)"

Once the increases are taken into account, the total paid by the consumer over the whole contract period is the same or higher. However the headline figure is what people use when comparing ISPs, perhaps (not unreasonably) expecting them to be a like-for-like comparison.

If the ISPs quoted the total cost over the contract period, that would be a fair comparison *and* encourage shorter contract terms. But sadly not.

In reply to a post by candlerb:

This is because that formula distorts the price seen by the consumer at signup time: instead of saying "£27 per month" they can say "only £25 per month! (*)"

Of course, this leaves a gap for an ISP to advertise "£26 per month, NO HIDDEN PRICE RISES!!"