New Zealanders Overpaying for Broadband Due to Misplaced Speed Needs

Many older New Zealanders are spending more on broadband than necessary due to a lack of awareness and confusing marketing strategies. A recent study by comparison site NZ Compare revealed that individuals aged over 50 often subscribe to higher-speed plans without understanding their actual internet usage needs. The research highlights a trend of being “speedwashed” into believing that faster connections are essential, leaving many consumers paying for more than they require.

Gavin Male, chief executive of NZ Compare, emphasized that nearly half of those surveyed did not know their current internet speeds. For most households, a reliable 100 Mbps fibre connection is sufficient for activities such as streaming, remote work, and online shopping. In fact, opting for a 100 Mbps plan could save consumers approximately $35 per month compared to a 500 Mbps option.

Male explained, “When fibre originally launched in New Zealand, 100 Mbps was the speed everyone celebrated. Much of the usage hasn’t changed significantly in the past few years, so the need for tenfold speeds is questionable.” He cited his own household, which manages multiple streaming devices on a 100 Mbps connection without issues.

Understanding Internet Needs

The discussion around appropriate internet speeds was echoed by Paul Brislen, chief executive of the Telecommunications Forum. He pointed out that internet requirements vary significantly between households. For example, a two-person household with minimal devices may not need the same speed as a family that works and streams content simultaneously.

“Assess your needs and adjust accordingly,” Brislen advised, highlighting that consumer awareness is key to making informed decisions about internet plans.

Consumer product test writer Nick Gelling noted that while many households may have faster connections than necessary, having extra bandwidth is generally advantageous. However, he acknowledged that selecting the right plan can be challenging.

Brislen urged consumers to review their options annually. “Telecommunications companies are always looking to attract new customers. If you find an attractive offer from a competitor, your current provider may match it if you ask,” he stated.

Challenges in the Market

Despite the potential for savings, many New Zealanders remain apathetic about exploring better broadband options. Male stressed that with fibre already installed in many homes, switching providers is as straightforward as changing energy suppliers.

He estimated that a quick comparison could yield savings of up to $400 to $500 annually. Male pointed out that providers typically reserve their best deals for new customers, knowing that once consumers are locked in, they tend to remain loyal.

Over time, incremental price increases can add up significantly. “A $5 monthly increase translates to $60 a year, which can accumulate quickly,” Male explained.

The Commerce Commission has also recognized the complexities consumers face when navigating broadband offers. Commissioner Tristan Gilbertson noted that many people struggle to comprehend the pricing structures due to their complexity.

To address this, the Commission has issued guidelines requiring providers to disclose average monthly prices when they differ from advertised rates. They are also examining the clarity of early-termination fees, which can be a source of frustration for consumers.

Gilbertson stated, “Early-termination fees often catch consumers off guard. They need to be clearly disclosed upfront and should decrease over the contract period.” This transparency aims to empower consumers to make better choices regarding their broadband plans.

In summary, as New Zealanders reassess their broadband needs, understanding speed requirements and actively comparing plans could lead to significant savings. By staying informed and proactive, consumers can ensure they are not overpaying for internet services that do not match their actual usage.