Virgin Media Community

[enlli]

https://amp.theguardian.com/business/2023/feb/16/o2-virgin-mobile-costumers-bills-increase

[Roger_Gooner]

Everyone is putting up their prices. Example: for BT it's 14.4% (which is CPI at 10.5% plus 3.9%).

[Andrew-G]

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@Roger_Gooner wrote:

Everyone is putting up their prices. Example: for BT it's 14.4% (which is CPI at 10.5% plus 3.9%).

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Sky reckon their average price rise is 8.1% this year.  Big difference to VM and BT. 

And my small ISP is putting up prices by........nothing, because they offer fixed prices during the fixed term as do many of the smaller players.  The massive inflation-busting increases aren't driven by necessity or the actual cost base, it's just opportunism and a belief that customers will accept it. Sadly the belief is probably correct.

[Roger_Gooner]

It doesn't matter what your small ISP is doing now as prices will have to rise as input costs like electricity and gas have risen. Staff are demanding pay rises, too.

[Buffer6]

The government will probably put a health warning on it and raise taxes 😂

[Andrew-G]

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@Roger_Gooner wrote:

It doesn't matter what your small ISP is doing now as prices will have to rise as input costs like electricity and gas have risen. Staff are demanding pay rises, too.

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What they do next year is irrelevant in the terms of this argument, although if you do want to start on next year, VM are ALREADY baking a swingeing RPI plus 4% increase for next year, that'll be magnified for any customers on discounted deals.  And whereas if my ISP increase bills I'll be able to take my business elsewhere without penalty or renegotiate, VM customers won't.

Coming back to the input costs, VM's latest results are due in three days but at the time of writing the most recent Q3 2022 results showed VM boasting about "accelerating profitability driven by price rises and synergies" - and that was before the current round of bank-account bleaching prices rises, and after last year's galloping energy prices set in, with EBITDA* for Q3 increasing by 8.6% year on year.  Operating cash flow for Q3 increased by £67m year on year, whereas revenue went down by £10m, meaning that operating costs must have gone down by nearly £80m, yet you're telling me that VM are having to recover rising energy and staff costs?  Don't make me laugh. 

I might also comment that VM are using RPI as their baseline index, which is based on a household family budget, which includes food, domestic energy prices (ie including levies business energy customers don't pay), entertainment and telecoms (so a nice little feedback loop there), travel costs, clothing, personal care costs, alcohol & tobacco, holidays and hospitality spending, mortgage interest and rents, domestic appliances and technology, all weighted to an average household.  That doesn't in any way reflect the structure of VM's costs.  VM's biggest costs are interest on their enormous debt mountain, and that's mostly long term fixed rate debt.

So, if we come to the rub, why are you trying to rationalise VM's price increase, when the available facts don't indicate it to be fair or reasonable?  

* For the uninitiated or disinterested, EBITDA = earnings before interest, tax, depreciation and amortisation, which can be considered the cash-equivalent profit from operational activities.

[unisoft]

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@Roger_Gooner wrote:

It doesn't matter what your small ISP is doing now as prices will have to rise as input costs like electricity and gas have risen. Staff are demanding pay rises, too.

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not necessarily. BT Openreach have upcoming cuts to wholesale fibre access for ISPs.

[Andrew-G]

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@unisoft wrote:

not necessarily. BT Openreach have upcoming cuts to wholesale fibre access for ISPs.

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A good call, although that's wholesale.  BT Retail still have CPI+3.9% baked into contracts, and they're sticking that to their customers regardless.  The way all the large telcos are inflating their costs in this way, by arbitrary but similar amounts that don't appear to reflect the movements in their cost base might lead a dispassionate observer to question whether this amounts to anti-competitive behaviour. 

If we had a competent regulator or a competent government they'd refer this to the Competition & Markets Authority for a thorough investigation, but neither are competent.  Ofcom are doing their own investigation into whether telcos are abiding by the rules (ie did they tell customers they were going to do this), yet doing the three wise monkeys routine with regard to the scale, extent and true impact of cross-market price ramping.

[Roger_Gooner]

Openreach's price cut applies only to parts of the country and has drawn criticism from altnets for uncompetitive behaviour, so it isn't wholly relevant to this discussion.

[Andrew-G]

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@Roger_Gooner wrote:

Openreach's price cut applies only to parts of the country and has drawn criticism from altnets for uncompetitive behaviour, so it isn't wholly relevant to this discussion.

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Surely it is relevant when you suggested that the price increases were justified by higher costs to the ISPs, and used the example of higher energy prices?  Costs are changing, many elements are going up, yet as per my earlier post there's accounting evidence that VMO2's net costs are actually coming down.  Staff aren't getting big pay rises (well, forum staff and other front line VM staff aren't; Lutz on the hand saw his salary doubled between 2020 and 2021).

Your timely response reminds me though, you haven't answered my honestly intended question as to why you are rationalising VM's price increases as though they're justified. You're a respected member of this and other forums, you're clearly thoughtful and logical, so why speak out to defend something that appears pure corporate opportunism?