The cost of getting yourself online
November 2007
Just how cheaply can we set ourselves up online nowadays? The market is changing fast, and new offers are popping up all the time, and the sheer variety makes me wilt.
However, my resolve was stiffened, as so often, by an email from a reader. It must be possible, he said, to help a beginner start on the broadband for less than the cost of a trip on the Orient Express, but if so, he couldn’t find out how to do it, and he was blowed if he was going to encourage his elderly aunt to waste a huge lump of her capital on some kit which had no second hand value and which she would never use to anything like its full potential anyway.
So all I had to do was find the best price for a laptop, appropriate software and broadband access. That, surely, was simple enough.
No it wasn’t. What I had forgotten is that the three worlds of computers, telephones and televisions are converging fast, and are crashing into each other with dizzying speed, creating a huge range of bewildering and fast changing options.
So let’s consider the basic economics – usually the only way to get to grips with this sort of muddle. The underlying and unchanging fact is that what all the companies really want is a continuing income from you – a nice regular monthly payment that they can rely upon for a good long time.
We should also remember that once they are connected to your house, they can deliver telephone, broadband, television and radio through the same wires, at no extra cost to themselves. Setting up the system is expensive, but once it’s there the cost to them of piling on the services is negligible. So they do pile them on, in fairly frantic attempts to encourage that regular monthly payment from you.
What this means is that incentives to sign up are becoming more and more tempting.
For example, as I write, at least two companies (www.redteninternet.com and www.carphonewarehouse.com) are offering a free computer if you pay them, for 36 or 24 months respectively, about £20 - £25 per month. Not bad, but it’s only for broadband. Compare it with the sort of deal available to those with cable connections (towns and large villages only); a friend in Edinburgh is getting broadband, 100’s of TV channels and free phone calls, all for about £35 per month, from www.virginmedia.com, in return for a 12 month commitment.
Even if you only have a bit of old copper telephone wire connecting you to BT (like me) then www.sky.com offer a similar package for about £42.
So what are the conclusions? All a bit fuzzy, I’m afraid. The certainties are that prices are on their way down, and whilst the longer you are prepared to commit to a company the cheaper the deal will probably seem at first, the harder you will kick yourself when prices halve next year.
The free computer deal from Carphone Wharehouse is tempting, if you can get it in your area. But remember that £25 per month for two years is £600, and you could probably buy a similar machine to the one they are giving away for about £325. So the broadband is costing about £275 – or £12 per month – and there are plenty offering to do broadband alone for less. www.orange.co.uk, for example, will give you broadband and free evening and weekend telephone calls at £12 per month for an 18 month deal.
My advice to my reader is that he arranges for his aunt to buy a cheap laptop, for less than £350, with the free Microsoft software on it, and sign her up to the cheapest 12 month deal her telephone company are offering. If she is still keen in a year, look more closely at the options at the time. They will be cheaper, I promise.
