Dial Up to Broadband - Very confused!

Hi Carole,

What a grab bag! I think you've managed to cover almost every nuance of buying broadband in Australia, and when you put it like that...it's pretty confusing. No, it's extremely confusing. Good thing there are sites like CompareBroadband to help explain these mysteries :D

Ok, let's start with going from Dial Up to Broadband.

Your telephone line consists of two copper wires, twisted around each other. This is standard practice around the world - when the lined were installed, the second line acted as a redundant or backup line. 

Dial Up places an analog voice call over your normal phone service, to 'handshake' with a modem on the other end. This type of connection is very slow by recent standards, because a voice call relies on a very low frequency signal.

ADSL is a broadband connection method that uses the 2nd, previously redundant line to provide a dedicated high frequency signal to the telephone exchange. At the exchange, TPG (or Optus, or another company) has an even bigger modem, and for the sake of argument let's say that this big modem has a big, fat pipe to the wider internet. That's what your line will be plugged into. So you can still have the voice service on one line, and a dedicated broadband connection on another.

Paying for stuff you don't need

Go back and look at that last paragraph. You'll notice that your ADSL connection is made up of two connections - the one from your house to the telephone exchange, and then that connection jumps to another piece of equipment owned by your service provider of choice.

That first bit of the connection uses the copper telephone line laid down by Telecom, which is now Telstra. Telstra is the wholesale provider of copper-line access to the telephone exchange in all areas. One of the conditions of wholesale access is that customers must take a phone voice service - even though many customers use a mobile exclusively.

TPG doesn't care too much if you use or want the phone service, to be honest. They're an internet company. All of their bundled plans include Telstra's line rental fee for $30, and then an internet fee on top of that.

The 100 mins of international calls, free local and STD calls are available as a bonus for $10. You don't have to get it - you just happened to be looking at a particular plan that included those freebies. You can save $10 by not getting them. So that's an easy fix.

Light user

Good, fantastic. There are plans with TPG ranging from 20GB of data to Unlimited. Go with the 20GB. It's $9.99 plus the line rental, for a total bundled price of $39.99. Easy. Done.

Paying for something up front, that you won't receive for weeks

Get ready for some economics.

Telstra charges a wholesale price for part of every connection, and then competes on a retail level with those same wholesale customers. Telstra also charges very high wholesale access rates to ferry internet traffic across the country and overseas as well.

The competition has to overcome Telstra's monopoly advantage by cutting costs elsewhere. The most visible sign of cost cutting is shipping customer service and technical support to lower-income countries. But then, Telstra does that too.

A less well known cost-cutting measure is doing away with a Credit Management department. This is the department that helps customers with overdue bills, payment plans and otherwise looks after a company's bottom line.

To get rid of credit management, you have to NOT offer credit. And that means pre-paying for everything. TPG, Internode and several other ISPs now make most charges pre-paid or direct debit to avoid having to chase customer down for bills.

The net result is mostly positive. People don't get behind on bills and hurt their credit rating. No credit check is needed to sign up. Costs are brought down.

Another big advantage of course, is that this de-incentivizes companies from inserting hidden charges or ridiculous 'overuse' fees. This does away with 'bill shock', where customers use the internet, unaware of the small print or how much they're using, and get hit with a thousand dollar bill for something they barely understand. If you're having customers pre-pay to get around chasing them down for a bill, then you have no reason to levy these sort of hidden fees.

Optus need the permission of my landlord

Optus and Telstra have Cable networks that can carry broadband, instead of phone lines. These can sometimes offer much faster connections, but if the house hasn't been prepped for Cable before, then some drilling needs to be done to bring a lead in from the cable tap at the front of the property. You can get around this by going with ADSL (phoneline-based broadband.

I'm renting and not sure how long I'll be here

TPG offers 6 month contracts.

Club Telco offers yearly membership fees in place of contracts, so you can leave whenever you like.

Internode offers one-month contracts.

Dodo offers 0-month contracts.

Most providers (except for Telstra and Optus) will offer a shorter contract in return for a steeper setup fee. That's reasonable. It costs the company a fair bit to get you connected- if you can't guarantee them at least 6 months service, then they have to recoup that money straight away.

Hope this all helps - you can always ring us for more information.

Thanks,

Adam at CompareBroadband

1300 106 571