This discussion paper presents the economic background and incentives for the sale of fixed broadband products via price comparison tools. It also looks at the commission structure and the significance of these tools for the broadband market and the importance of individual broadband operators for the respective comparison websites. It concludes with a product and price comparison between the comparison tools and the provider websites.
The comparison tool landscape in Germany is strongly characterised by two major websites, Check24 and Verivox. In addition, many websites offer price comparisons for broadband products, but these often only include the tariff searches of the larger websites. Smaller platforms with their own tariff search typically narrow their offer down to a few large broadband providers.
The business model of the comparison tools is essentially based on commissions; other (but significantly less relevant) sources of revenue are advertising and the sale of aggregated market data. Compared to other economic sectors covered by comparison tools, the cashbacks and commissions for broadband contracts are relatively high. Our analyses indicate that TDG and Vodafone are by far the two most relevant telecommunications providers for the comparison platforms. Regional providers or providers focusing on fibre play only a minor role (so far), even in total.
The price comparisons show that there is no such thing as ‘the least expensive’ comparison tools. Particularly for products offered by infrastructure owners on bandwidths between 50 and 250 Mbps in download, the prices calculated over 24 months are almost always lower on comparison websites than on the provider websites due to one-off cashbacks. The highest cashbacks are paid out by these same infrastructure owners on legacy infrastructures. Although FTTB/H tariffs are being marketed to an increasing extent, at least by Check24 and Verivox, the cashbacks here are generally lower than for products via xDSL and cable.
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The role of price comparison tools for the German broadband market (Nr. 525)
WIK report analyses the business model of price comparison tools and benchmarks their products and prices in comparison to the conditions offered by telecommunications operators directly.
Price comparison tools play an increasingly important role as a source of information and sales channel for various types of products and services on the Internet. This also applies to broadband. This discussion paper analyses the business model of comparison websites and their significance for the fixed broadband market.
