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Cheap Broadband 'Deals' Offer Less Than You Think for More Than You Realise

18/02/2015 13:06 | Updated 19 April 2015

Broadband deals in the UK are sold under a practice called 'compound pricing'.

The term, to quote John S. McGee - professor of economics and opinionated cage rattler of the 1950s and 60s - describes a situation where the "price or availability [is] conditional on the purchase of other goods".

Or: If you want to buy this, you have to buy that.

McGee also labelled it "predatory", because of the way it allows companies to tempt customers with prices that mean nothing at the checkout.

The nature it is such that the first thing we should ask when we see 'Get Super-fast, Super-unlimited, Super-broadband for only £7.50 a month!' isn't whether that's a good deal, but how many people are actually paying that.

Because the unfortunate answer... is zero.

Rather than pick on a particular provider as an example (unfair, since they're all at it), let's instead suppose a generic broadband deal where the headline monthly price is £7.50 and the contract is 18 months. £135 total, right?

Oh, for a life so simple.

Broadband deals from all the biggest providers, bar Virgin Media, add compulsory line rental at around £17 per month, and while providers do usually write 'plus £17 per month line rental' somewhere near the headline price, it tends to be placed, styled and sized in such a way as to avoid attention.

Furthermore, the headline price almost never lasts the length of the contract, rather only the front end of it (the first six months, say) after which time it's doubled, tripled, or even quadrupled.

As a general rule, the cheaper the deal, the more unforeseen costs are sneaked in at various stages of the sales process. The very cheapest broadband deals, for example, tend to charge for postage on the router (£7-£10), and add a one-off fee of around £50 under the auspices of 'installation' 'set-up' 'line transfer' 'one-off' 'up-front' or some other equally vague telecoms patois.

Sky, for example, has a 'fibre activation fee' (whatever the hell that is) of £30, a £20 'line transfer fee', and a £6.95 'broadband hardware delivery charge'.

BT goes even further, applying compound pricing structures to individual elements of the already-compound-structured package. Optional extras from BT such as additional cloud storage, internet security and anytime calls are labelled 'FREE', then have charges of £3 or £5 per month applied after honeymoon periods that are - unbelievably - of differing lengths.

It's theoretically possible to go to our generic provider and subscribe to a broadband deal that costs £7.50 per month for the first six months, then £14.99 for the next twelve, with internet security that's free for a month, then £3 per month for 17 months, has unlimited anytime calls that are free for three months then £5 per month for 15 months, has a £16.99 per month line rental fee that runs the whole length of the contract, a £35 one-off installation fee, a £15 line connection fee, a £1.89 fee for using your debit or credit card, and £6.99 for the postage of your router.

Now, tell me how much that costs?

Even as editor-in-chief at Cable.co.uk, even dealing with broadband deals every single day, I'm confused.

Because I'm supposed to be confused - because the last thing providers want is for me to work out that a £7.50 per month broadband deal will cost £500-£700 by contract-end.

Equally confounding is exactly what speed I'm going to get and/or at what times of the day I'm likely to be able to get it. In broadband's obscure tongue, absolutes like 'unlimited' are not absolute. Over the years, Sky has offered packages that are 'unlimited', 'totally unlimited', and 'superunlimited'.

Most broadband deals are subject to restrictions on what you can and can't do with your connection at 'peak' times. Providers call it 'traffic management'. Customers call it 'throttling'. I'll leave it to your discretion which term you think best applies.

Furthermore, many providers fail to adequately warn customers who live distantly from their exchange that they're not going to receive anything approaching the speeds advertised.

You're not alone if this sounds to you like the way Ryanair used to advertise staggeringly low prices before adding tax at the checkout and fees for everything from luggage to toilet visits, then dumping you 50 miles from your destination city.

But chin up now.

Last month, the EU's top court ruled that air travel booking systems must present customers with the final 'compound price' of the flight from the outset - that the prices first listed must match those you finally pay. In the opinion of Claire Edwards, specialist and legal director at law firm Pinsent Masons, broadband and other industries adopting compound pricing will not be far behind.

"Although the ruling is specific to rules governing the provision of price information in the air travel industry," she said, "the principles established by the Court would be likely to be followed in the event that a similar case is brought against other compound pricing practices under more general consumer protection legislation".

Compound pricing has been recognised as a misleading and disingenuous way to sell a product, and change is likely on the way. Shamefully, though, until then, opaque pricing and confusing language will ensure broadband customers remain baffled about what they're paying, and about what they're getting.