Broadband prices hit all time low but Brits still wasting millions

The broadband industry continues to thrive, with nearly 15 million households now spending over £3 billion subscribing to a service.

A new report from independent price comparison and switching service, uSwitch.com, reveals that average broadband prices have dropped 36% over the last 4 years to their lowest level, while speeds are faster than ever. Despite this, 5 million households are paying more than the going rate for their broadband, wasting a staggering £162 million a year.

uSwitch.com has compared the average price for the most popular speed in January 2004 against the same for 2008. Four years ago, customers could expect to pay an average of £27 a month for broadband with a standard speed of just 0.5Mb. Today, the majority have signed up to a headline speed of 8Mb costing an average of £17 a month. This is a saving of £120 a year for a service 16 times as fast.

The broadband market is dominated by the same key players that first piped high speed internet into homes four years ago, but while some companies have slashed prices by as much as 46%, others have dropped their charges by just 29% – a difference of 17%.

Dearest to cheapest

AOL shared the top spot with Orange for the most expensive 0.5Mb broadband 4 years ago. However, it now offers one of the lowest priced standalone 8Mb services on the market. At £15 a month, this is a price decrease of 46%.

Still the most expensive

At £28 a month, Orange offered the joint most expensive 0.5Mb broadband in December 2003. Today it offers the most expensive standalone 8Mb service, at £20 a month. This decrease of just 29% over 4 years is well below the average drop of 36%.

2Mb price drop

Telewest 2Mb broadband cost £50 a month at the end of 2003. Now rebranded as Virgin Media, it offers 2Mb broadband for £18 a month, a price decrease of 64%. Of all the major suppliers, only Virgin Media offers standalone broadband packages at more than one speed.

Today’s cheapest 8Mb

With Orange offering the most expensive 8Mb standalone broadband package, Plusnet currently offers the cheapest. At just £10 a month, the service is half the cost of its dearest rival.

Speed Demons

The fastest broadband in December 2003 was a 2Mb package from Telewest. Today, Virgin Media remains the speed pioneer. It is planning to roll out a 50Mb service by the end of 2008.

Steve Weller, Head of Communications Services, at uSwitch.com comments: “With broadband both the cheapest and the fastest it’s ever been, our love affair with the internet is set to reach great heights this year. We predict that prices will stabilise, but customers will be offered more for their money, with companies continuing to increase speeds. Broadband providers such as Be*, O2 and Sky already offer speeds above the 8Mb “standard”. Be* offers broadband packages with speeds up to 24Mb for a monthly cost of £18, only 81p more expensive than the average price of 8Mb broadband. We advise the 3 million customers currently not in a contract to kick start 2008 by snapping up a new broadband deal.”

Advice for consumers choosing a new broadband service

Be aware that the “up to xMb” speed offered by suppliers is the maximum connection speed the provider offers. Actual speeds experienced may be significantly lower due to factors such as the quality and length of the physical line from the exchange to the customer’s premises.

If you are switching providers you should make sure you get a MAC code from your current supplier before switching, to minimise your break in connection.

If switching from cable to ADSL you will need a new modem.

Any email address linked to your current supplier will no longer be available once you have switched supplier. Make sure you have informed all your contacts about this change of email address and back-up any important emails and contact details stored in your supplier’s webmail service!

Think about how much you will be downloading a month and ensure your new package will cover this. Online services such as the broadband barometer at www.uswitch.com can help you to do this.

If your package offers “unlimited” downloads per month, make sure you read the small print on the supplier’s fair usage policy.