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


There are plenty of tempting ADSL 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, the odds are good 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 generally offer you two choices: month-to-month plans at a slightly higher cost, or 24-month contracts that are usually a little cheaper or more generously provisioned than the month-to-month plans, and often offer a free router/modem as an additional incentive. That’s the hook to get you on board as a customer for a lengthy stretch, because on the surface it’s the cheaper option over time.

Under those circumstances, it would be sensible to sign up for two years, right? It’s not as though you’re likely to want to stop being online, after all.

However, it is worth carefully considering the terms of any two-year contract, for one simple reason. The National Broadband Network (NBN) rollout is progressing, and while it’s a massive political hot potato (which we won’t get into here) the precise timing of when NBN services are likely to appear in your area should play a part in your decision to sign up for a lengthy contract plan.

If you’re not in an already NBN-ready area, it would make sense to 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.

If you’re on track to get NBN services within two years

If your location is on the rollout schedule within the next two years, be careful when signing up for any two-year ADSL plan. The closer your premises is to being "NBN ready" (that is, that services exist on the NBN that you could connect to), the more problematic a two-year contract could be.

When the NBN is switched on, a "grandfathering" clause for the existing copper will allow for an 18 month period of dual service, meaning you'll still be on ADSL even though NBN is available. That could potentially leave you with either additional connection fees when you do transition to the NBN, or the possibility of being stuck on a slower connection than you could be enjoying because you can't get out of your contract.

The devil, as always, is in the details, and these will vary by ISPs depending on the terms of the contract.

As an example, Telstra’s provisions for switching to an NBN connection from a simple ADSL plan are relatively straightforward:

"Transferring to the National Broadband Network (NBN)
Your 24 month contract could overlap with the rollout of the NBN. If you wish to transfer to the NBN with Telstra, please contact us. If you don’t wish to transfer to the NBN we’ll continue to provide your service up until the date on which we’re required to disconnect it as part of the migration to the NBN, when we’ll cancel your service and your access to existing networks. No ETC [early termination charge] will be charged in these circumstances."

That’s fairly direct; if Telstra has to disconnect you it will, but in doing so it will cease your contract immediately at no additional charge. You may be able to connect to the NBN under your existing Telstra contract, but you’ll have to contact it in order to do so. Quite what that will entail in contract terms is left unclear.

Any ISP is going to want to keep you as a customer, but quite how far along the path of creating simple ways for you to transition technology types can vary from provider to provider. This could include cancellation or reconnection fees to a new NBN connection, or the removal of service while waiting for NBN provisioning.

NBN: The choice dilemma

The other issue to consider with the arrival of the NBN is one of choice. Because nbn (the wholesale provider) sells its services to ISPs to then provide to you, the arrival of the NBN potentially opens up competition options you may not have had previously as ISPs jostle for your broadband dollar.

As such, while your ISP may have processes in place to transition you to an NBN connection, they may be on a deal that’s not the best that you can get, or require re-contracting for a further two year period. It’s not in their interest to simply let you shuffle to another provider, after all, so they’re not likely to make that simple to do if it affects their bottom line.

If you’re in a location that’s due to get NBN services connected in, say, the next six months or less you should calculate your likely costs; it may be wiser to go on a month-to-month contract. If the NBN connection is likely very soon indeed, you might be better off to just pick up a data SIM for a mobile broadband hotspot or your smartphone and utilise mobile data in the interim.

What if the NBN rollout is delayed in my area?

There’s a certain amount of ambiguity in the NBN rollout schedule, which historically has run behind where it was expected to be for a variety of reasons. For the same reasons that it’s wise to carefully consider the applicability of two year ADSL contracts right now, it would also be unwise to believe that the proposed rollout schedule represents an absolute fixed point after which the NBN will definitively be available to you.

What if I’m not due for NBN for more than two years?

At this stage it’s extremely unlikely that the NBN rollout will accelerate to any notable degree, so you’re relatively safe to sign up to a two-year contract, especially if your schedule suggests late 2018 or 2019 NBN service delivery.

You may find your choice of ADSL providers shrinks somewhat as the overall ADSL market contracts due to the incoming NBN, but there are still plenty of high-value, low-cost deals available.

NBN areas: Two year contracts are fine

If you’re in an area where the NBN has already rolled out, this isn’t something you need to stress about. You can instead assess your plan choices based on your budget and likely data and speed requirements.

Not all technologies offer the same kinds of speed and data tiers, with FTTP NBN services currently providing the widest variety of speed tiers, followed by FTTN NBN and the more fixed provisioning of Fixed Wireless NBN and Satellite NBN services. HFC NBN is expected to offer similar speed tiers to FTTP NBN when it launches.

Image: Shutterstock

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