Logical play: switching to another provider?

[#1]

Hello,

Purpose of this feedback is (i) to set out for Plusnet's consideration the logic behind my impending switch to a new broadband provider and (ii) confirm my thinking isn't flawed here:

1. Nearly a year ago I entered in to a 12 month 38mb broadband fibre contract with Plusnet. If I'm not mistaken, I paid 197.88 line rental upfront, plus 5/month thereafter, plus a £5 activation fee (I believe a discount was on offer at that time). Total cost for the year: £262.88

2. I called Plusnet and explained my 12m contract is approaching expiry, and I am moving home also. The offer on the table was: 197.88 line rental upfront, zero activation/setup fees, plus 9/month thereafter. Total cost for the year: £305.88

In my area (London), there are various other providers who offer very similar speeds, unlimited usage, zero setup costs for new customers, at a total cost for the year considerably lower than £305.88

Is it a no-brainer, therefore, to switch to a new provider - or are there other factors at play that aren't apparent to me?

[#2]

If it is all about the money then no.

[#3]

Largely it's money and the way the whole market is geared towards getting more customers.

At £5 a month, I can't imagine plusnet actually made anything on your broadband last year. Look at the current offers-line rental is a straight £18.99 so the ADSL pack for new customers is free broadband. Putting it simply, no provider can actually provide customers the same new customer offers and remain viable. Add in your case that plusnet would also have to pay to cease you at one house and or provide at another and they simply can't cover your costs.

All providers these days rely on customers being either happy enough with what they have to not mess about moving for a few pound a month or simply forget about moving. Problem now is no provider out there now can buck that trend. If they offered existing customers the same deals as new they'd be out of business quickly, and if they reduced existing prices by not loss leading first, they'd simply get no customers to begin with.

[#4]

The reality is that nearly every industry is driven by total idiots these days - insurance (car, home, property), mobile phone, utilities, ISP/CP services.  Cheap as chips introduction year with cashback in which the provider makes no profit.

The reason why this is so idiotic is that all of the costs of acquiring new customers is all front loaded; businesses seek to attract new users (at loss or minimal margin) hoping to keep them in following years.  The problem is everyone is doing it and no one will 'blink' to come up with a sensible pricing practice.

Consider for example an approximation of the OP's figures...

• £200 year one - customer happy but no profit
• £300 year two onwards - might make worth while profit - customer not happy butterflies off else where - everyone loses
• Alternation model - £250 every year with some kind of introduction sweetener £50 cash back in the second year - company covers new customer acquisition cost in year one, makes profit in the following years

The problem is that whilst just one company promotes lost leader no profit service offerings the butterflies will flock to them.  Whilst gaining market share at minimal (if any) profit the ultimate outlook is that such a company is likely to struggle to deliver service … to the detriment of its users.

One way or another we are ALL responsible for this - we are all as bad as the worst of the bean-counters who are driving this business model, by not understanding the value of anything but only being concerned about its cost.  Only cheap comes cheaply.  That is why providers such as Zen has such excellent customer service scores - you pay for value, you get value.

That said despite the apparent all doom and gloom seen around here, Plusnet have consistently been reported as doing better than the majority of the other ISPs.  I guess that no matter how bad things look here, they are even worse elsewhere?

[#5]

Hi there.

Thanks for getting back to us via our community forums.

In addition to what's been said above, it's also worth noting and accounting for within the cost we've quoted for your house move that we'll be covering a £65 house move fee and also potentially a new line installation fee of £49.99.

The £65 covers the cost of deactivating your old services and activating them at your new address, and the line installation for an engineer to go out to connect the line.

Let us know if you have any further queries.