Two former BT Group PLC (LSE:BT.A) executives have launched a new internet service provider that analysts say could disrupt the UK market.
Claiming that households are “being held hostage by the big broadband companies”, startup Rebel Internet pledges to offer fair prices without needing to tie customers down with contracts any longer than a month.
Rebel argues that the current broadband market is “truly broken”, with households tricked into long-term contracts with hidden fees and price rises ahead of inflation, such as the 14.4% hikes for BT, Vodafone and Three this year.
The startup's two founders, Tucker George, former managing director of business transformation at BT, and David Groth, ex-strategic director at the FTSE-listed giant, will still be reliant on their former ‘big broadband’ employer.
Like most ISP in the UK, including Sky, Vodafone and Talktalk, Rebel Internet will use infrastructure provided by BT’s Openreach network.
A £55 contract lasting 30 days with Rebel would allow a customer to gain 1000Mbps, a type of offer that mirrors BT’s, according to analysts at Deutsche Bank.
“The month-long contract is attractive though,” analysts at the bank added.
It is possible that this is the early signs of the retail broadband sector resurging after big players have recently hiked fees in line with the consumer price index.
Success by Rebel is "less damaging" to BT due to Rebel's use of the Openreach network, but the Deutsche analysts also expect "increased competition by ISPs availing of growing alt-net and perhaps Virgin Media O2 (over time) infrastructure supply".
Later down the line, any proposed combination of Vodafone and Three UK is expected to come with increased fixed broadband ambition, perhaps utilising fixed wireless access technology.
BT shares were up 1.5% today, boosted by measures announced in the government's new Budget., while Vodafone Group PLC (LSE:VOD) was down 1.5%.