Broadband bundles – Friend or foe?

  • Cheaper prices, but less control
  • One contact for issues
  • Watch for hidden fees

The telecommunications market moves very quickly, and is highly competitive. Most internet service providers (ISPs) these days have to pull off a neat trick – they must be specific enough to differentiate themselves from their competitors, while also being all things to all people – internet provider, phone provider, and mobile provider.

The average customer doesn’t make money for a provider for the first few months of their service agreement. When you factor in the cost of obtaining a new customer and setting up their physical connection at the exchange, and the ongoing cost of maintaining that account, a customer doesn’t start making money for that company for nearly 6 months! After that, the company can make a profit on that customer, and will continue to make more the longer they retain them. This puts more power in the customer’s hands then they may be aware of.

In the past, the best way to make a customer profitable was to sign them up for long contracts. This is as true for internet services as it is for mobiles. Contracts, of course, can be frustrating for customers who wish to take advantage of new deals and promotions, and so several companies started offering no contracts or low contracts. This is riskier for the provider, which is why there are usually steeper setup costs involved.

Bundles: Good for the provider or for the customer?

Bundles were introduced across the board as a customer-friendly way to keep customers loyal to one provider. By providing a one-stop-shop, providers can attract customers who want to make their lives easier, while also guaranteeing their continued loyalty.

But do Bundles actually make life easier? The pros are straightforward: one place to call when something goes wrong, one bill, and discounted pricing. The cons are a little harder to see, but they include: less control over each individual service, less opportunity to take advantage of other offers, and of course, less power to walk away when your experience is poor.

When taking up a bundle, it’s important to apply the same logic that you would to purchasing each individual service. If an offer sounds too good to be true, it usually is. Be careful to take note of what free calls or other incentives are offered. If you’re offered free national calls, but never make them, then is that really an incentive? Each company will exclude one item or another, and it’s important to consider whether that will lead to a larger bill than you were expecting – the most notorious example being calls to mobiles, which are very rarely included in free call bundles.

On the flipside, an unlimited download limit for your internet connection sounds great – but it also looks very good to people who will actually take advantage of such a freedom, which can make the overall network more prone to congestion. Most low-usage or light plans these days still include anywhere from 20 to 100GB, which is a LOT of data, if you’re not streaming video, downloading movies, or playing online games.

It’s important to always use tools like Compare Broadband’s plan wizard to properly determine which provider matches your needs – whether you know what you want, or aren’t sure.