Why you should think twice before signing up for a 2-year broadband plan

There are plenty of tempting broadband plan deals available right now, but signing up for a long-term contract might not be in your best interest.

If you’ve been on your existing broadband plan for a while, odds are high that you’ve actually gone off contract, existing in the world of month-to-month payments for your broadband service. Or perhaps you’ve just moved house and need a fresh new connection to keep you online. Either way, you could be in the market for a new broadband plan.

Internet service providers (ISPs) will typically offer you two choices: month-to-month plans that come with a variety of set-up fees and modem charges, or 24-month contracts that waive those upfront costs in exchange for the long-term commitment.

Presented with these options, it's tempting to choose the 24-month option to minimise your immediate costs. After all, you probably won't stop needing Internet access within the next two years. Before you sign up, though, there are some important factors you'll want to consider.

The NBN transition

If you're looking to sign up for an ADSL service, you should first check the status of the NBN rollout in your area. Most ADSL services are scheduled to be disconnected 18 months after the NBN is available in a particular area, so committing to a 24-month ADSL contract could result in you having to pay cancellation or reconnection fees once the NBN is fully available.

Fortunately, some ISPs make the transition to the NBN a lot less painful. Telstra, for instance, will let you maintain your existing ADSL or cable contract when switching to the NBN, so you don't have to worry about recontracting or paying cancellation fees.

If you’re not in an already NBN-ready area, you can drop your address into our NBN tracker and carefully assess the information it provides about when you’re likely to see the NBN locally. Look up those details and read on to learn about what your best choice will be.

A flexible contract means more options

The arrival of the NBN has given Aussies far more choice when comparing broadband services. Because NBN Co (the wholesale provider) sells its services to ISPs that then provide Internet access to you, the NBN opens up a lot more competition than there was previously. This has led to many ISPs offering discounted introductory deals or simply undercutting each other to attract more customers.

By signing up to a month-to-month contract with one of these ISPs, you can take advantage of the increased competition and try out different plans to find the one that best meets your needs. Switching NBN providers is a relatively quick and simple process that typically requires no additional infrastructure work, making it a worthwhile endeavour for folks wanting the best deal at all times.

The freedom of a month-to-month contract is also valuable for ensuring an NBN provider can actually meet your Internet needs. Individual providers can offer wildly different typical evening speeds, drastically impacting the performance you'll get during the busy hours of 7pm to 11pm. On a month-to-month contract, you can test a provider's Internet speeds for yourself to make sure they're suitable before committing for the long term.

2-year contracts have their advantages

If you've found an Internet provider you're happy with and you don't foresee any major changes to your living situation in the near future, committing to a 24-month broadband plan might be the right move. The lower upfront costs can save you a decent chunk of money over the course of your contract and some Internet providers even throw in additional incentives like enhanced phone services or bonus account credit.

Just bear in mind that most fixed-term plans will charge you an early termination fee if you decide to cancel your service before the end of your contract. This charge can be quite steep, so be sure to take that into consideration before signing up.

Not sure which plan is right for you?

Head over to our comparison of casual month-to-month broadband plans to find one that fits both your Internet needs and your budget.

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