Why is KPN so expensive?

New customers sometimes ask us; “How come that your prices are so low?” We always answer; “It is not our prices that are low, it is KPN that is expensive.”

Then, of course, comes the second question; “Why is the KPN so expensive?” The answer is simple but a bit long, so I decided to write it down once and for all.

The most important reason that KPN is so expensive is because most of the users are prepared to pay their high prices. About 65% from all subscribers in the Netherlands still use KPN. The question is why do they still do that? Why do they pay the (very) high prices of KPN while there are quite a lot of other telecom suppliers who offer much lower prices?

We think there are several answers:

1) Mostly, people are used to KPN. They have been using KPN for years when it was a monopoly and they keep using it now. They are not interested or too lazy or indifferent to check other, better options.

2) Some users have had bad experiences with “new” suppliers: The quality of the line was bad, the billing was inaccurate, etc. So they came back to KPN.

This might have happened in the past, but in the last years there have been big improvement in all aspects of telecom services. The quality of the telecom services offered today by many companies can be compared to the quality of KPN. In many cases the new suppliers offer better quality telecom services.

3) Another reason for the high prices of KPN may be the monopoly mentality of this company.

Although not a monopoly anymore, KPN is still used to charge high prices. There is absolutely no connection between cost price and sales price.

China is a good example. Calling China costs 89 cent/min. with KPN. With us it costs 5.5 cent/min. and we still make a profit on this. KPN, that is much bigger, buys termination to China at a much lower price than we pay but sells it 16 times more expensive than we do. It is easy to see that the prices of KPN are artificially high. There is no connection whatsoever between their buying and selling prices.

KPN will keep on having high prices as long as customers are willing to pay these prices. Only when customers leave in order to enjoy low prices with other suppliers – only then will KPN substantially reduce its prices.