Super-fast broadband is a rip-off!

Later this year, Virgin Media will roll out a super-fast 100Mb broadband service. But are these light-speed packages really worth the money?

As a financial journalist working from home, my broadband Internet service is a vital tool. Without it, I wouldn’t have a job to speak of. Alas, almost a year ago, that’s exactly what happened...

My broadband provider -- a small business based in Sheffield -- was cut off for failing to pay its wholesale bills to BT. How I panicked when I signed on to see BT’s message informing me that I was cut off from the online world!

To be honest, I should have foreseen this problem, as my service had become increasingly shaky in the month before my broadband died. Nevertheless, I gave my supplier the benefit of the doubt, as I’d been a happy customer for four to five years.

In hindsight, it is blindingly obvious that I should have ditched and switched my service a long time ago. After all, I was paying £15 a month for 8Mb broadband, when faster and cheaper deals were waiting for me. That’ll teach me to drag my feet...

Light-speed access

Likewise, if you’ve stuck faithfully with the same broadband service for more than a year, then it’s high time that you shopped around for a better deal. Otherwise, like me, you’ll be on a ‘legacy tariff’ paying high monthly fees for an inferior service.

Indeed, according to lovemoney.com partner Broadband Choices, three in five UK households (60%) now subscribe to a broadband service with speeds of 8Mb or higher.

Nevertheless, the lightning-fast 100 Mb services in development are sure to catch on, offering broadband access up to 12 times faster than a typical 8Mb service.

Already, Virgin Media offers the fastest consumer broadband package in the UK. Its 50Mb XXL service can reach 12.6 million homes via Virgin’s fibre-optic cabling.

In addition, since May 2009, Virgin has been testing broadband speeds of up to 200Mb in Ashford, Kent. Using a new technology known as DOCSIS3, this is the faster Internet access in the world, beating even Japan’s world-beating 160Mb consumer broadband.

Just last week, Virgin announced that it is to begin rolling out the UK’s first 100Mb broadband services at the end of 2010. This ‘wideband’ service is sure to appeal to hardcore Netheads and techies, including online gamers and those who like to watch TV and HD movies online.

Meanwhile, BT Broadband is hot on Virgin’s heels with its 40Mb Infinity fibre-optic package. Infinity was available to 500,000 customers when launched, but BT plans to cover another 2.5 million homes by this summer, and four million households by the end of 2010.

At the same time, BT is testing its next-generation fibre technology -- offering speeds up to 100Mb -- in Muswell Hill (North London) and Whitchurch (South Wales). By this summer, BT aims to offer speeds between 40Mb and 60Mb to ten million homes.

However, these expected 100Mb services won’t come cheap, because suppliers charge premium prices for premium products. Indeed, I suspect that they will cost perhaps £50+ a month, which adds up to a tidy £600 a year. Let’s find out how today’s super-fast packages compare:

Blisteringly fast broadband (over 20Mbps)

Source: Broadband Choices; Set-up charges may apply; for full terms and conditions, please see provider websites.

(For an in-depth, head-to-head comparison of BT and Virgin broadband, read Jane Baker’s The fastest broadband deal ever.)

As you can see, signing up to Britain’s fastest broadband isn’t cheap. Indeed, expect to pay somewhere between £264 and £438 a year for these services. In addition, a connection charge may apply (usually £50 to £60), but these are often waived to encourage you to sign up.

Furthermore, in the world of broadband, ‘unlimited’ has something of a new meaning. It means ‘subject to our fair-usage policy’, which means your service could be reined in during peak times.

Over time, the price of ‘ultra’ broadband packages is sure to continue falling. In fact, when Virgin Media launched XXL a year or so ago, it cost £51 a month without a Virgin phone line, or £38 with a Virgin line. These prices have now dropped to £38 and £28. Hence, I expect we will have 100Mb services for under £40 a month in 2011 and beyond.

Big savings on basic broadband

Personally, I believe that I can live without these speed-of-light broadband packages. I barely watch TV online, I don’t play online games, plus I rarely download music or games. Equally, if you don’t need such incredibly fast broadband, or aren’t particularly tech-savvy, then why pay for a service that you’ll rarely or never use?

In other words, don’t get lured in by the hype about super-fast broadband. Not everyone needs it, and unless you do, and plan to use it as it is intended to be used, then you’ll be wasting your money on a very expensive rip-off.

For a review of mid-level broadband packages, read Get better broadband for under £10 a month. For ultra-cheap broadband (around a pound a week), read Get super-fast broadband for £3 a month.

Finally, with new tariffs launching almost every week, the cost of broadband continues to fall. Get the best deal for your budget.

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