Why are Sky/UPC/Eircom all increasing prices

lightspeed

http://www.uswitch.ie/broadband/news/2015/01/16/eircom-announce-price-increase-from-april-2015/

"Sky and UPC price rises

Following in the footsteps of Sky and UPC eircom is not the only company to increase their prices – both Sky and UPC will charge more for their TV bundles from 01 February following previous increases in Spring 2014.

Sky Original Pack and Sky Variety will go up €1 and €2 per month respectively with no price increases planned for its various TV add-ons. UPC’s Value TV package will cost €1 more per month with a similar increase noted for their Horizon Max package.

Horizon Select Extra will increase by €4 while some movies and sports subscriptions will rise by €3. In addition to the rise in Horizon TV packages, UPC has also upped the price on some Sports and Movie package add ons while their core broadband services remain unaffected".


I rang up after 12 month contract came to an end with UPC and it reverted back to the latest price and instead of reducing the price they kindly reminded that its going up by €10.00 next month. we have multi room in 2 rooms which used to be €5.00 per room and was even €2.50 when i first switched to upc years ago. Under current price its €8.00 a room but as of 1st February 2015 it will be €11.00 per room.

According to above article, Sky have increased their prices and Eircom will be doing the same in April 2015.

Why is this? why all of them almost at the same time? im suspicious as this appears to be collusion unless there is a valid reason for price increases?

Typically increased competition is good for consumers and price falls but here we have a situation where each competitor can increases prices without worrying about the other competitors reduce price to capture market share. Why is that?

Im currently experiencing issues with my broadband and only getting between 5 and 13mbps. Not happy that quality of service is going down and price keeps going up.

Nelbert

UPC are using it to get people to sign up to new contracts. They increased my charge to the price of the package above (i'm BB only) so they got me to renew the contract with either the lower price to stay the same or stay at the same price point for the 240mb.

bk

First of all UPC have actually reduced the prices of their broadband + phone packages quiet significantly.

120Mb/s has gone from €44 to €40 and
200Mb/s has gone from €53 to €45 AND they have increased the speed to 240Mb/s AND they have added unlimited mobile calls!!!

Actually all very impressive and welcome price drops and improvements. So it isn't all bad news.

I expect the price of UPC's TV packages is going up because Sky and the other content suppliers are raising their prices, thus UPC have no choice but to pass on these price increases.

It is very noticeable that every year, TV services get more expensive, something UPC has little control over, while their broadband and phone services, which they have far more control over, get cheaper and fast every year. That really says a lot to me.

Pretty much all of these companies increase their prices every year. However the good news is that it is a great opportunity for a savy consumer to reduce their costs. Usually these price increases mean a break in contract, which normally means people can call UPC/Eircom/Sky up, threaten to cancel and get a nice reduction for a few months.

Nelbert

UPC sent out price increase letters. Expected me to pay €45 for the 120meg package unless I signed up to a new contract. I would imagine this is the type of behaviour the OP was referring to.

bk

Nelbert wrote: »

UPC sent out price increase letters. Expected me to pay €45 for the 120meg package unless I signed up to a new contract. I would imagine this is the type of behaviour the OP was referring to.

So what? All companies do this?

You'll only get a 20% (roughly) discount on gas and electricity if you sign up for a new contract every year, otherwise the price jumps to the normal rate.

You shouldn't take it personally, instead be a savy consumer.

It is the job of a company to make profit and thus get costumers to pay as much as possible without them quitting.

You should be a savy consumer, realise this is what they are doing and shop around regularly to get the best deal. Because they really don't want to lose you and will often give significant discounts. THere are large savings to be made by doing this.

If you are too lazy to shop around and just accept the price increases, then you have no one but your self to blame.

Every ISP does this, as does every TV, insurance, electricity, gas, etc. company.

It isn't anything personal, just business.

paulosam

Do you have any professional association with UPC? they way you often aggressively promote them in some of your posts is somewhat baffling to me if you don't.

BionicRasher

The overexuberant UPC love sometimes seems almost like a shill.
Not all BBand ISP companies up their prices year on year like you suggest bk.
I have been with Vodafone for almost 5 years and on the same price all that time with no need to plead with them each year to not up my prices.

Cuddlesworth

paulosam wrote: »

Do you have any professional association with UPC? they way you often aggressively promote them in some of your posts is somewhat baffling to me if you don't.

Feel free to point out where he is wrong. UPC get a fair amount of flak but they also take every chance to upgrade their infrastructure, there backbone is surprisingly good and they have laid down a considerable investment in Ireland over the last 15 years.

Plus they offer the cheapest broadband by a mile.

crawler

It's simple.

They increase prices because while people complain about it, very few leave. So if the benefit of a price increase (increased revenue and margin) is greater than the loss from customers leaving, then you increase prices. Simple really.

Customers who do leave are more likely to be more price sensitive anyway and less loyal. So until people start to switch in droves, prices will keep going up.

You can still attract new customers with limited time offers like half price for x months...

BionicRasher

Cuddlesworth wrote: »

Feel free to point out where he is wrong. UPC get a fair amount of flak but they also take every chance to upgrade their infrastructure, there backbone is surprisingly good and they have laid down a considerable investment in Ireland over the last 15 years.

Plus they offer the cheapest broadband by a mile.

They may offer cheap broadband but its to a limited audience.
Other providers have a wider reach and prices are not going up. See my example above

ThisRegard

paulosam wrote: »

Do you have any professional association with UPC? they way you often aggressively promote them in some of your posts is somewhat baffling to me if you don't.

He's making perfectly good points. Despite annual price increases, year on year I've actually managed to save money and get better packages. It's common sense if people looked beyond the headline grabbing price increase.

lightspeed

Cuddlesworth wrote: »

Feel free to point out where he is wrong. UPC get a fair amount of flak but they also take every chance to upgrade their infrastructure, there backbone is surprisingly good and they have laid down a considerable investment in Ireland over the last 15 years.

Plus they offer the cheapest broadband by a mile.

Well i had a upc guy out today andmy broadband is still under performing. I wasnt home but my father was and said that the technician said that there is too much demand as we have the 2 multirooms. The box is my attic bedroom and we have tv on 2 other boxes, 1 downstairs and 1 in my mothers room just below me.

UPC speed test says im getting 48 Mbps so and as i mentioned in previous post when i complained about the current price they told me how the multi room price is going up to €11.00 from February and then advised that i should pay an extra €5.00 for up to 240 mbps and that was before i informed the agent of the problems i was having with broadband.

As regards to the "why dont you shop around" the problem is as i mentioned that all of them are putting up their prices at the same time so i dont see how there is much room for shopping around?

Considering how dominant UPC are in the market why did Sky feel that it could afford to increases prices without losing customer to UPC?

Considering fuel prices are way down and Ireland in general has become a bit more competitive in recent years, im not understanding this necessity for all of the major market players to increase price?

lightspeed

bk wrote: »

So what? All companies do this?

You'll only get a 20% (roughly) discount on gas and electricity if you sign up for a new contract every year, otherwise the price jumps to the normal rate.

You shouldn't take it personally, instead be a savy consumer.

It is the job of a company to make profit and thus get costumers to pay as much as possible without them quitting.

You should be a savy consumer, realise this is what they are doing and shop around regularly to get the best deal. Because they really don't want to lose you and will often give significant discounts. There are large savings to be made by doing this.

If you are too lazy to shop around and just accept the price increases, then you have no one but your self to blame.

Every ISP does this, as does every TV, insurance, electricity, gas, etc. company.

It isn't anything personal, just business.

Yes but if they all increasing prices at once, surely they realise they are in a stronger bargaining position where if the customer states that they want to cancel, they have little reason to offer as much of a discount to keep you if any as there probably little chance you actually follow through and cancel to go elsewhere.

ThisRegard

How would fuel prices affect TV and broadband provision?

lightspeed

crawler wrote: »

It's simple.

They increase prices because while people complain about it, very few leave. So if the benefit of a price increase (increased revenue and margin) is greater than the loss from customers leaving, then you increase prices. Simple really.

Customers who do leave are more likely to be more price sensitive anyway and less loyal. So until people start to switch in droves, prices will keep going up.

You can still attract new customers with limited time offers like half price for x months...

Yes but what is not simple is how is do we have a market where we have increased competition and yet instead of consumers paying less they are paying more?

Can economist is in the audience explain why prices are not falling instead of rising as a result of increased competition?

testicle

ThisRegard wrote: »

How would fuel prices affect TV and broadband provision?

Someone has to ferry your packets around. :pac:

lightspeed

ThisRegard wrote: »

How would fuel prices affect TV and broadband provision?

Probably dont too much but im sure they have vans on the road each day so i assume cost have come down a small bit. In any case, where have costs risen? If costs have not risen and competition has increased which it has, why have prices for consumers gone up instead of down?

helimachoptor

Cost of r and d for new technologies
Cost of funding new TV programmes
Paying for ever increasing premier league rights
Sky have nearly 30k employees who want a pay rise
Shareholder dividends



Cost of fuel for sky's vans I'd imagine is borne by Sierra and would have factored into their commercial negotiation with sky

dub45

helimachoptor wrote: »

Cost of r and d for new technologies
Cost of funding new TV programmes
Paying for ever increasing premier league rights
Sky have nearly 30k employees who want a pay rise
Shareholder dividends



Cost of fuel for sky's vans I'd imagine is borne by Sierra and would have factored into their commercial negotiation with sky

The inflation rate in Ireland was recorded at -0.30 percent in December of 2014

Ireland Inflation Rate Turns Negative

Irish consumer prices dropped 0.3 percent year-on-year in December of 2014. It is the biggest decrease since June of 2010, due to lower cost of transport, food and clothing.

helimachoptor

You do realise sky is a UK company? Ireland is a very small part and isn't going to be particularly influencing the direction of prices company wide

dub45

helimachoptor wrote: »

You do realise sky is a UK company? Ireland is a very small part and isn't going to be particularly influencing the direction of prices company wide

Presumably Sky Ireland experience Irish costs when operating here?

And for the record:

Most recent CPI Great Britain (inflation figure) 0.549 %

helimachoptor

Some costs, majority would be general business costs which would derive from the Uk.

While inflation may be down my post is still valid there are a lot of costs people just don't consider tbh

dub45

helimachoptor wrote: »

Some costs, majority would be general business costs which would derive from the Uk.

While inflation may be down my post is still valid there are a lot of costs people just don't consider tbh

The inflation rate etc are designed to reflect those costs!

What are the sky costs which would derive from the uk where the inflation rate is minimal anyway?

bk

paulosam wrote: »

Do you have any professional association with UPC? they way you often aggressively promote them in some of your posts is somewhat baffling to me if you don't.

Hold on there, serious accusation!

I have absolutely no association with UPC, beyond having UPC broadband.

I don't work for any telco or ISP and I'm in fact a software engineer. I'm not very anonymous here on boards, I joined boards.ie as a committee member of IrelandOffLine many moons ago and many regular posters know who I am and can confirm.

The reason why I have such a great respect for UPC, is because of the absolutely fantastic job they are doing for the Irish broadband market. We simply wouldn't be where we are if it wasn't for UPC and the competition and investment they brought to the Irish market.

Despite all the moaning, UPC have in fact reduced their broadband prices significantly this month (200 from €52 down to €45 and 120 from €44 down to €40) while giving us one of the highest broadband speeds in Europe for a may €45 a month!!!

Trust me Eircom would never have rolled out VDSL as fast as they did and for cheaply as they did if it wasn't for the extreme competition from UPC.

We mightn't exactly have super cheap broadband, but we do now thanks to UPC have super fast broadband for a reasonable price and that is far better then we were a mere 3 years ago!

It is very noticeable that UPC's broadband prices are decreasing, but their TV prices are increasing.

Stop and think about that for a moment. Why is that?

Is it because unlike the intense competition in the broadband market, Sky and the other content owners have a monopoly on TV. In particular sports rights, but it also extends to all of Skys channels.

If Sky and the other content holders increase their wholesale prices for their TV channels, then UPC, Eircom and Sky (retail) have no choice but to pass those prices increases on.

And what exactly do you expect UPC, Eircom, etc. to do about that?

As long as people want those channels, they have little choice but to offer them.

Really peoples anger should be directed at Sky and the other content owners and the English football league. The rights to the premiership come up for negotiation this year and guess what, the cost is expected to go up significantly as Sky, BT and ESPN all bid for them, which means we will all end up paying more for pay TV.

That is why I've given up on pay TV and just use saorview and freesat now.

helimachoptor

dub45 wrote: »

The inflation rate etc are designed to reflect those costs!

What are the sky costs which would derive from the uk where the inflation rate is minimal anyway?

If the premier league rights went by inflation we'd all be happy, the pl will drive the cost up as much as they can.

R and D may not be done in Ireland and the UK, sky boxes are not made in the UK or Ireland so inflation doesn't appky there.

Shareholders don't want inflation level payouts, they want and get good returns or guess what they sell, share price plummets and then lots of nasty thing happens.

Sky commission a series for 1 million, a year later do you think they just pay 1 million + inflation?

Come on

lightspeed

Much of the expense mentioned, seem to be the same kind of expense they much incur each year with little evidence or reason to see why such expense have risen to necessitate the price increases.

im not so much looking at this with the question of are rising price justified? Im looking at from an economic viewpoint suspicious of colluding activity which i admit is only my own speculative theory.

If O2 spent a fortune upgrading to 4 or 5g or something similar, shelled out a fortune and had workers on the brink of strike, could they increase their fees in same manner as Sky or UPC without losing large numbers of competitors to the wide range of competitors? Highly unlikely.

Sky knew obviously when they were expanding broadband into ireland that UPC is their biggest rival. However, they increased prices without worrying about UPC capitalising on it by keeping prices lower. How come?

UPC aswell as SKY must have noticed Eircom further expanding eFibre across the country and yet did not fear them enough not to increase their prices. Why not?

It appears none feared each other actions as they each knew each other would be increasing prices.

helimachoptor

Tbh price increases for the most part happen every 12-18 months, I don't see anything that will change that.

The threat of Apple TV Netflix etc is not as big as people expected imo and the view that these companies would force down prices on a grand scale hasn't happened.

BionicRasher

bk wrote: »

The reason why I have such a great respect for UPC, is because of the absolutely fantastic job they are doing for the Irish broadband market. We simply wouldn't be where we are if it wasn't for UPC and the competition and investment they brought to the Irish market.

Despite all the moaning, UPC have in fact reduced their broadband prices significantly this month (200 from €52 down to €45 and 120 from €44 down to €40) while giving us one of the highest broadband speeds in Europe for a may €45 a month!!!.

Maybe its comments like this that make some people think you are the UPC CEO in disguise.!!

They seem to be good deals and speeds are great but your fecked if you don't live in one of the few areas that can actually get the service.

Prices will rise year on year for a lot of things but if we have increasd competition and inflation is negative then simple economics would suggest that price should fall or remain level so that's why it is a little strange to me that prices have gone up from some suppliers.

lightspeed

last year when i contacted after we were out of contract, the prices they were offering then was €66 a month for all tv, broadband and phone. it might have been €45 for first few months but was €66 after that. Now with their snazzy new price increase i will be paying over €100.00 a month with UPC.

So as for your information that they have reduced their prices and we should be patting them on the back for it, no we should and your wrong.

The fundamental economic question remains as to how competition increases and consumer pays more?

Nelbert

bk wrote: »

So what? All companies do this?

You'll only get a 20% (roughly) discount on gas and electricity if you sign up for a new contract every year, otherwise the price jumps to the normal rate.

You shouldn't take it personally, instead be a savy consumer.

It is the job of a company to make profit and thus get costumers to pay as much as possible without them quitting.

You should be a savy consumer, realise this is what they are doing and shop around regularly to get the best deal. Because they really don't want to lose you and will often give significant discounts. THere are large savings to be made by doing this.

If you are too lazy to shop around and just accept the price increases, then you have no one but your self to blame.

Every ISP does this, as does every TV, insurance, electricity, gas, etc. company.

It isn't anything personal, just business.

No need for the aggressive tone. Simply pointing out the facts.

Johnboy1951

As far as I can see UPC broadband offerings are dropping in price. UPC have a great deal of control over the costs of providing the broadband service.

UPC also offer a TV service, and they have little or no control over what they must pay for the content they provide. Their TV service is rising in price.

These are essentially separate services with different cost bases ...... I fail to grasp why posters seem to be conflating them and implying that because the cost of one is rising so is the other.

The Irish economic situation has little or no bearing on the cost of the TV service. The most costly parts of the service are from imported content.

...... or so it seems to me .....

lightspeed

But if they are still quite profitable, could they not just bear the burden of increased cost in delivering their tv service which would be offset by customers of Sky coming to UPC as a results of Sky's price increases.

Yet they decided they would waive this opportunity and increase prices knowing full well that Eircom is growing is gaining market share as it expands eFibre broadband across the country.

dub45

Johnboy1951 wrote: »

As far as I can see UPC broadband offerings are dropping in price. UPC have a great deal of control over the costs of providing the broadband service.

UPC also offer a TV service, and they have little or no control over what they must pay for the content they provide. Their TV service is rising in price.

These are essentially separate services with different cost bases ...... I fail to grasp why posters seem to be conflating them and implying that because the cost of one is rising so is the other.

The Irish economic situation has little or no bearing on the cost of the TV service. The most costly parts of the service are from imported content.

...... or so it seems to me .....

If you have a package that is increasing then the price is increasing simple fact. Some UPC packages have increased way out line with inflation according to people posting online and the Irish operation of UPC appears to be quite profitable anyway.

Fitch considers the cultural similarities of the UK's and Irish Republic's cable markets provide strategic sense for the acquisition, and the strong margin of the Irish business (LTM September 2014 EBITDA margin of 48.3%) is accretive to the enlarged business.

bk

lightspeed wrote: »

But if they are still quite profitable, could they not just bear the burden of increased cost in delivering their tv service which would be offset by customers of Sky coming to UPC as a results of Sky's price increases.

Sure, but what do they do next year when Sky increase their TV prices again? Swallow the price increase again?

And what about the year after that? Do UPC swallow Sky's TV price increase every year until UPC goes broke?

That only ends up benefiting Sky by eliminating a competitor! Sky increase their wholesale TV prices almost every year.

If UPC just swallows the price increases, that means they have less money to invest in their broadband network, which means not as many people get their high speed broadband or new higher speeds. None of which would be good.

Personally I think it is only fair and right to pass any of Sky's TV price increases onto the people who actually want Sky's TV channels. While those of us who don't want pay TV, get the benefit of ever cheaper and faster broadband.

You should really be directing your anger at Sky.

lightspeed wrote: »

Yet they decided they would waive this opportunity and increase prices knowing full well that Eircom is growing is gaining market share as it expands eFibre broadband across the country.

Actually UPC has been destroying Eircom in the areas in which UPC are operating. Eircom has lost as many as 50% of their customers in UPC areas!

While Eircoms eFibre footprint is expanding, that is outside areas which UPC operate, so it makes no differences to UPC.

Eircom in fact will be extremely worried about the entry of ESB/Vodafone FTTH into the areas they currently have a monopoly on. Eircom could end up losing 50% of these customers to to the ESB FTTH as it is rolled out.

Johnboy1951

lightspeed wrote: »

But if they are still quite profitable, could they not just bear the burden of increased cost in delivering their tv service which would be offset by customers of Sky coming to UPC as a results of Sky's price increases.

Yet they decided they would waive this opportunity and increase prices knowing full well that Eircom is growing is gaining market share as it expands eFibre broadband across the country.

If one part of the business is very profitable, then they have an opportunity to reduce consumer costs for that service .... particularly if they have market competition. That is what appears to be happening with their broadband service.

If they need to increase prices for their TV service to keep it profitable then that seems reasonable.

What you propose is that those who only want their broadband service should subsidise those who want their TV service.

Equitable for the customers? Hardly.

helimachoptor

Upc could start investing in creating their own content so they wouldn't be as dependent on sky..

Avada

You have also got to take into account that Sky have had to add 2% extra VAT onto their TV packages for Irish Customers since January due to the change in EU vat laws. Do you really think they're going to absorb that without increasing prices? The price increases were effectively 3.5% and 5.5% on the original and variety packages respectively, so 2% VAT increase is quite a chunk of that.

(disclosure: I used to work for Sky, I haven't worked for them in quite a while and have no affiliation with them any longer)

Cuddlesworth

dub45 wrote: »

If you have a package that is increasing then the price is increasing simple fact. Some UPC packages have increased way out line with inflation according to people posting online and the Irish operation of UPC appears to be quite profitable anyway.

Why would they decrease prices, they have no competition? Their lowest package is better than what 95% of Eircom customers can get. And Eircoms VDSL is not a competitor, its dead tech and a waste of resources

The only way they would increase their prices further is when Fibre to the home is rolled out. And the first place that any reasonable business would target is dense areas outside of UPC control because UPC have their cables laid down, they have their cabs and backhaul in place. They have strong contracts with Tier 1 providers due to their size. Its important to note that DOCSIS 3.0 is actually capable of 1.5gig down and 250mb up, with 3.1 probably capable of doing 10gigs down and 1.5gigs up. So even if you dropped the cables down, UPC would just upgrade their existing backhaul for minimal cost and offer a equivalent service for less.