London-based alternative broadband provider Cuckoo has closed a $6 million investment round.
Led by RTP Global, whose previous backings include Yandex, Delivery Hero, and Datadog, the round also saw participation from JamJar, previous backers of Bulb, Deliveroo, Talis, and Oatly. Individual investors included former Monzo and Stripe team members, as well as Verizon’s former EMEA director.
The State of Affairs
Our internet service provider. The one we all love to hate and hate to love. No longer an option in today’s world, it’s simply one of those necessities that get filed under, “Bills”. And if I’m wrong, I challenge you to think about any other service you pay for that you complain about as much as your broadband provider (ok, I AM looking at you mobile phone provider, but we’ll save that story for another time).
And then there’s that, “Am I really getting what I’m paying for here?” question that is bound to come up in this conversation. Quite simply put: No.
“Consumer broadband is one of the largest markets yet one of the most poorly served. Consumers are fatiguing of customer-hostile pricing practices, inflexible contracts and deliberately awful customer service, and just as we have seen in insurance, energy and banking, we will see a number of challenger providers come in to eat incumbents' lunch with differentiated product packagings and a fresh respect for their customers," says RTP Global partner Gareth Jefferies.
Broadband providers typically employ the age-old tactic of, “show them something shiny and new, and bury the details in the fine print.” I.e. they’re oft to typically entice new customers with discounted prices to draw consumers into a long-term contract with extortionate fees to cancel (*cough cough * again, mobile phone provider). If and when you weather the storm and simply just carry on, i.e. “out-of-contract”, prices can be up to 89% higher than when that contract started.
According to UK consumer group Ofcom, “We have found that around 40% of broadband customers (8.7 million) are out of contract. On average, these customers pay around £4.70 per month more than their provider’s average price for their service."
The industry term for this process is referred to as the broadband loyalty tax, with more than 25,000 people rolling into this tax without even realising it.
And now for the good news
Cuckoo is out to make broadband simple. They offer a single 67 Mb/s fibre connection on a rolling monthly contract with no hidden fees. That’s it. No-fuss, no muss. According to the firm, their service will save consumers around £130, and provides double the average UK speed.
“The broadband market is broken and consumers are being ripped off every day. The importance of fast, reliable and affordable broadband has come into sharper focus with millions of people working from home over the past year,” comments Cuckoo founder and CEO Alexander Fitzgerald.
In 2021 alone, Cuckoo has grown more than 250%, is launching nationally on uSwtich today, and this round of funding is expected to increase the size of the team as well as expand marketing and customer acquisition.