The fact that broadband never runs as fast as the advertised headline speed of 'up to' however many 'meg' is of no great surprise to many, but based on a survey of 2,000 consumers, O2 is suggesting that the average consumer is wasting money buying a package which is faster than they need. The research shows that the average user is paying for a package faster than 8Mbps, whereas most users' requirements don't exceed this. The problem is somewhat exaggerated by providers that do not offer customers slower product options, or simply make regrading difficult or expensive. This equates to over £2m being wasted each day.
Some of the figures produced by the survey show that the common up to ~20Mbps packages cost £202.70 a year, where as the average price for an 'up to 8Mbps' package is £126.37. Of course the calculation is not as straightforward as every person needs to assess what they do with their broadband connection, however there are clearly savings to be made. Users should also be aware that in some cases, if you drop from an 'up to 16Mbps' package to an 'up to 8Mbps' one, it may revert from the ADSL2+ standard to ADSL, giving a small speed drop those currently experiencing 4 to 5Mbps throughput, or the usage allowance may not be sufficient for the user.
It may be unusual for a broadband provider to be suggesting some users would be better off on a slower package, but the survey does support the suggestion that most users simply don't use the Internet in a way which requires a super-fast connection, leaving millions of households potentially paying too much for their broadband service.
The survey found that less than a fifth of respondents used their broadband connections for streaming video:
"62% of broadband consumers in our survey would prefer their ISP to provide packages based around their specific needs. Therefore our industry needs to tailor its services to people's needs, help consumers understand exactly what they should be buying and avoid marketing based solely on speed."Felix Geyr, Head of O2 Home and Broadband
In effect the new packages that O2 is launching next week are aiming to try and help consumers make an informed choice, with the product selling itself more on what you intend to do with your broadband, rather than focussing on the headline grabbing speed figures. One important aspect of the new packages is that customers have the option of a simple 30 day rolling contract (£29.99 connection fee, rising to £54.99 for those without an O2 mobile phone) or they can opt for a 12 month contract. As many of the larger providers are standardising 18 and 24-month contracts, the rolling monthly contract is very welcome.
|The Basics||The All Rounder||The Works|
|Ideal Use:||Just for everyday surfing and email||Enjoy music and catch up on your favourite TV. Perfect for smaller households.||Best for movies, connected gaming and larger households|
|Downloads:||20GB a month||Subject to FUP of 100GB a month||Subject to FUP of 250GB a month|
|Also included:||G class router||N class router||N class router, static IP address, Annex M uploads|
|Broadband + Line rental, O2 mobile customer||£15.50||£19.50||£27.50|
|Broadband + Line rental, not O2 mobile customer||£20.50||£24.50||£32.50|
|Broadband only, O2 customer||£8.00||£12.00||£20.00|
|Broadband only, not on O2||£13.00||£17.00||£25.00|
The fair use policy for the products can be read at http://www.o2.co.uk/broadband/policy. If you do exceed the fair use policy figures, O2 will get in touch to ask you to either upgrade or change your usage patterns. All the products are delivered using ADSL2+, although users on the top-end "The Works" package can opt for uploads speeds of up to 2.5Mbps if they live close enough to the exchange, the standard upload being up to 1.3Mbps. Static IP address is an optional extra £5 per month on The Basics and The All Rounder, but is included in the price of The Works.
O2 had some 700,000 fixed line broadband customers at the end of June 2010, so it is rapidly catching up with Orange. Factors such as the 30-day 'Happiness Guarantee' that means customers can cancel their contract (even a 12-month one) if they are not happy with the service within the first 30 days after signing up, are helping them to grow rapidly.
Update 6th September 2010: Added link to the FUP and added the 100GB and 250GB figures to the article.