Customers paying over the odds for own-label broadband

20 octobre 2021 Pierre Perrin-Monlouis

Why customer loyalty can cost more than you bargained for when buying broadband

It is not always a case of ‘every little helps’ when it comes to own-label broadband. As big brands jump on the bandwagon and launch own-label broadband services to try and take advantage of their customer’s loyalty – consumers could be paying over the odds as opposed to finding a bargain.

Waitrose and Tesco both offer own-label broadband services, as do among others – the Post Office and The Utility Warehouse, with Scottish & Southern Energy about to launch their service.

However, a recent review by Simplifydigital, the Ofcom accredited, free and impartial broadband, digital TV and home phone comparison service, shows that in some cases own-label is adding as much as £200 to annual subscriptions.

Simplifydigital reviewed three big services: Tesco, Waitrose and the Post Office to see how they compare to the market leading specialist broadband providers.

Tesco, is the biggest disappointment – especially as Tesco is a business which likes to take the high-ground in terms of consumer choice and value for money.

Tesco offers six broadband packages across a range of price points, none of which are price competitive. Their cheapest broadband package “Tesco value broadband” offers a minimal up to 0.5 Mb/s speed and a limited download cap of just 3 Gig, for a whopping £13.67 per month excluding line rental.

This compares to TalkTalk, which offer san up to 8 Mb/sec broadband package with a 40 Gig usage cap, plus free evening and weekend calls, for less than half the price (£6.49 per month excluding line rental). If you are an existing Sky TV customer, you can get a 2 Mb/sec broadband service for free in most areas.

At the top end of the market Tesco’s Finest Broadband package stacks up just as poorly against the competition. It offers a low speed of up to 2 Mb/sec with unlimited downloads for a huge £24.44 per month plus line rental, with no free calls. The TalkTalk broadband package mentioned above offers a far faster broadband package with free calls, for a quarter of the price. And the best selling O2 Broadband service is just £7.34 per month (excluding line rental) for existing O2 customers, and offers award winning UK based technical support, with an up to 8Mb/sec service with unlimited downloads. So again it’s up to four times faster for less than a third of the price!

But stranger still is Tesco’s decision to offer three dial up packages ranging from a 1p per minute pay-as-you-go service, to a £12.22 per month “anytime” service. Bearing in mind the high cost of these services relative to many great value broadband deals on offer and the huge drawbacks for the consumer of dial up – it is hard to understand why they want to push these services. These dial up services are useful for the limited number of households who physically cannot receive broadband, but they are a very poor option for the majority of Tesco customers.

As Charlie Ponsonby, CEO of digital TV, broadband and home phone comparison service Simplifydigital comments:

“People expect Tesco to deliver great value for money, but in the case of broadband it certainly does not, being nearly twice as expensive as popular services such as TalkTalk broadband.”

“Customers really should research the market very carefully before buying a broadband package, because big brands that you know and trust may not offer the best deal – and if you do make a bad decision you could be locked into a long term contract and waste hundreds of pounds per year.”

Simplifydigital also found that Waitrose’s own-label broadband service is significantly more expensive than the competition, but offers faster speeds than Tesco and, and as you would expect from John Lewis, has a good reputation for customer service, which is an attractive feature for many broadband users.

It offers only one Waitrose Broadband package which is an up to 8Mb/sec service for £18.58 per month excluding line rental. The service does not come with a free call plan (like the comparable TalkTalk service) and does not come with a free wireless router. The Waitrose wireless router costs an additional £24.47. But on the plus side, you do get 24/7 technical support.

The Post Office offers two broadband and home phone packages which are comparable with TalkTalk. Its Standard Package offers an up to 8 Mb/sec service with a limited 5 Gig usage cap, and free evening and weekend calls, for £19.53 per month including line rental.

This is cheaper than the Tesco and Waitrose services, but is still more expensive and offers less features than the best selling TalkTalk package.

The Post Office Broadband Extra package offers an up to 8Mb/sec broadband service with unlimited downloads as well as free evening and weekend calls. This package costs £24.42 per month including line rental. This compares to the equivalent Tiscali package which costs just £9.99 per month for the first 3 months and then £14.99 per month including line rental, (though there is a £40 set up charge).

But the specialist providers can only offer their very cheap deals in the areas where they have put their own equipment in the BT telephone exchange. So many people will not be able to take advantage of them – and it is for these people that the Post Office service becomes a good alternative.

So why are these own-label services struggling to match the price of the specialist providers? Much is down to how these companies are providing their broadband services. Most, like Tesco are simply buying the BT Wholesale broadband service and selling it on to their customers. The drawback of this is that they start from a high cost base relative to the specialist broadband providers such as TalkTalk, O2, and Sky. These specialist providers invest in “local loop unbundling”, which means instead of buying broadband services from BT Wholesale (and selling them on), they are actually putting their own equipment in the BT exchanges which allows them to sell broadband far more cheaply.

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