The Most Common Mistakes when it comes to buying Broadband plans
- Line rental probably not what you think it is
- Wi-Fi, Wireless, Mobile- all different things
- Bundles are not always your friend
The market for broadband internet in Australia is complex. That’s why this site exists – to help people (most of whom don’t really care about the political element of providing communications) to just get to the best value plan available to them.
Here’s the biggest misconceptions we come across that give consumers the most grief, and as brief an explanation as we can provide as to why it is how it is.
1. Why do I have to pay line rental if I don’t use the phone?
To understand this, you have to understand that your ‘phone line’ is a line of copper that carries phone and internet communications. We think of it as a phone line because traditionally, that’s the only service we used it for. But this would be like calling an electrical power point a “Toaster Line” if all we ever used it for is to plug in a toaster!
Telstra Wholesale is the company that provides the actual copper infrastructure. They own the exchange buildings (one of which is probably less than 5km away from your home) where your copper line leads back to. They also own the actual copper line between your house and the exchange, and everything in between – including those little grey pillars in your street. Most importantly, they own the actual conduits and tunnels beneath your street that those lines go through. They own millions of miles of Australian real estate – much of it only half a metre wide! Optus owns the same sort of network, but only to about 15% of Australians. This sort of connection is referred to as ‘Last Mile’ (or ‘Last Kilometre’).
Telstra Wholesale and Optus Wholesale sell access to this last kilometer network for between $20 and $30 a month, to all the Internet Service Providers (ISPs). Focusing just on Telstra now - at the moment, each ISP has its own individual deal with Telstra; prices are not the same for every ISP. That should be changing soon, but the single price will probably still be about $25 a month. Even BigPond has to effectively this line rental from the wholesale company.
The copper line can carry phone, or internet, or BOTH. The line rental doesn’t pay for the phone service, it pays for access to the copper line. The phone service is added because even though many people don’t want it, many other people do- and phone calls are almost pure profit for the telecoms.
Naked Broadband offers the exact same underlying service (internet over a copper line), but with no additional phone service. The ISP still pays a line rental to Telstra Wholesale – sometimes less than the bundled line, sometimes the same. This line rental fee will still get passed on to you, the consumer; but due to a quirk in definitions, they can advertise it as having “No Line Rental”. Look into it, and you’ll find that a Bundled Deal and a Naked DSL deal cost exactly the same. Sometimes, the Naked DSL costs a bit more! That’s because the telco has lost the opportunity to charge you for phone calls, so you’re otherwise not as profitable a customer.
So, can you get a bundled deal (which aside from sometimes being cheaper, is also easier to set up) and just not plug in a phone? Yep, absolutely.
2. I get Wi-Fi wireless internet from Vodafone
Nope, not quite. Wi-Fi is the name for the technology that allows you to share your internet connection, wirelessly, with other people within a 50 metre range of the Modem. Wi-Fi is not a service that you pay for – it’s a feature of your equipment. A good analogy is this – remember portable home phones? The portability had nothing to do with your service – it was a feature of your home phone handset. In fact, the radio technology to connect a portable phone is so similar to the one used for Wi-Fi that the two can clash!
Wireless is a generic term for…well, no wires. It can be applied to many applications, and can cause a great deal of confusion.
Mobile Broadband is the service that Vodafone (and many others) provide. This is a service where your local mobile tower transmits a data connection to a little device plugs directly into your laptop- sometimes called a USB dongle. It’s exactly the same as the internet connection on your smartphone, just in a different form factor. Those USB dongles have SIM cards in them, just like mobile phones.
BUT, you can get other devices, like Pocket Wi-FI, that receives a mobile internet connection, and then re-transmits out via Wi-Fi – so all your devices can connect. Confusing, right?
3. Bundles save me money
Bundling your line rental and your internet service is a no-brainer. Line rental is not a service – it’s just rent you pay. You’re allowed to pay your line rental direct to Telstra (for which they’ll give you a dial tone and a phone number, as per their traditional business model), and then buy broadband off say, TPG. But for TPG, this is a little more expensive behind the scenes, so they can’t offer you’re their best deals. In that scenario, you’d be paying Telstra $32 for line rental, and then $60 for TPG’s Unlimited plan. Your overall costs for communications is $92.
If you bundle, TPG have more room to discount. So they’ll charge you $30 for line rental, and only $30 for Unlimited broadband. Your total cost is $60.
Bundling in a mobile, however, is more in the company’s favour than yours. Same goes for Pay TV, if available. Mobiles are far more lucrative than landline and internet connections. And by bundling everything together, they can wrap up everything in the one contract, keeping you locked in nice and tight for all your communication needs. For this, you’ll get a few discounts.
This is kind of like if Myer or David Jones said “I know our dresses are twice as expensive as the same dress at the DFO. But if you buy them here, and agree to also buy your shoes from us only, we’ll give you 30% off”. By the time your brain has worked out this twisty and curvy dealio, you realize you paid twice as much for an item…to save 30%. You Lose!
Let’s take an actual example.
Telstra phone = $32/month
Telstra 200GB Broadband = $100/month
Bundle Saving = $30 –
Telstra $59 Mobile cap plan = $59/month
Mobile bundle saving - $10 –
Total cost - $151
And everything in tied to the same 24 month contract. If you take a service away, the other service will jump up in price. Let’s compare this against some non-bundled options. For the internet, we’ll use Internode as an example, because they’re similarly priced to Telstra (thanks to their industry leading customer service and support).
Internode landline - $30/month
Internode 200GB broadband = $70/month
Bundle saving = $20-
Amaysim Unlimited Mobile - $40/month, no contract
Total - $120/month.
And if you’re unhappy with one service or another, you won’t be penalized and see your rates shoot up! So before taking up a bundle, ask yourself whether or not you’re really saving money.
That’s the three big ones. If you need assistance with choosing the best broadband plan for your area, please call us on 1300 106 571 today.