In reply to a post by MrSaffron:

A big difference between a fixed price contract for life and a fixed price for an 18 month term.

Well no-one is offering a fixed price contract for life. Some are offering a fixed price for an 18 month term such as TalkTalk, but their current offer is set to end on 22/12/2016.

I agree it remains to be seen how long Vodafone holds its current low standard pricing, but it's certainly market-leading for the time being at least.

So at £22 pm for Vodafone mobile customers, do you think Vodafone are covering their costs? Do they need their mobile customers to make landline phone calls to break even?

Why worry about that? It's the business decision they've made, and I can see the logic behind it - if they've got you, a customer, on two of their services, and offer you a bundle discount, should you think of leaving them, you'll think twice because it'll be a great hassle: by leaving a mobile service you'll lose the discount on the broadband, and your mobile and broadband contract terms aren't likely in sync meaning they've got a greater leverage when convincing you to renew your contract, plus you can't disconnect both services at once and take a similar discounted bundle from TalkTalk, BT, EE, Virgin or Sky (and Plusnet have just launched theirs). So once they've got you on their home+mobile bundle, you're all theirs and you won't leave. Eventually you'll just get used to having everything Vodafone and won't want to leave eithet. And it's worth more than a couple of pounds they lose by offering you a discounted broadband.
P.S. And if you look at their out-of-bundle charges for mobile... It used to be £1 per minute to call abroad and they've just upped that further - if they're doing that they don't need much to break even

Edited by deleted (Sun 20-Nov-16 18:53:02)

I am curious, though I concede it is a difficult question. If all ISPs could cover their costs at £22pm then there is a chance that their prices will reduce, OTOH if Vodafone can't cover their costs at that price, then they are more likely to put prices up or quit.

The linkage to a mobile contract is not that strong and might easily be outweighed by a better deal with another mobile phone network.

It is a new entry to the market, providers generally make a loss in the initial few years, e.g. Sky in 2006 was launched & made a loss for many years. The consideration is gaining market share ie cheap prices.

Vodafone have the advantage of an extensive backhaul network. As MrSaffron has noted, the offer might change once the already installed capacity is inadequate and costly network upgrades are needed. That said, I'm sure you're right to say the current price is a deliberate move to grab market share.

I wouldn't be surprised if Vodafone launch an IPTV offering and attempt to compete in the "quad play" market (television, landline phone, fixed broadband and mobile).

In reply to a post by David_W:

As MrSaffron has noted, the offer might change once the already installed capacity is inadequate and costly network upgrades are needed.

Vodafone (ex-C&W) have multiple 10gb/s backhaul links to exchanges they've LLU'd, compared to 1gb/s links which TalkTalk and Sky have deployed so I'd guess congestion (at exchange level at least) will be extremely unlikely on Vodafone. Just a shame they don't officially allow you to use your own router, otherwise I'd jump over to them in a heart beat for my second vdsl2 line.

And with just 170,000 customers those will be very empty links most of the time currently.

Another reason for lower price is cost of acquisition is lower as they aren't playing the affiliate game, so missing from a number of comparison sites, the downside is that may mean lower exposure to the public.