Mobile phone and broadband prices continue to drop - even as we get more for what we pay

Whether it’s doing the banking, keeping in touch with friends and family or researching a school project, internet access is part of daily life.  And with so many of us stuck at home because of COVID-19, we’ve been reminded just how important connectivity is.

So it’s no surprise that paying for home broadband and mobile phone services is a key part of our household budgets.

What might be a surprise, though, is that while speeds and download limits keep going up, what we pay is actually going down.

New research from the Bureau of Communications and Arts Research (BCAR) shows the overall affordability of communications services is continuing to improve in Australia. Importantly, for low income households, there are affordable options to meet their basic data needs.  

The trend for communications services to get more affordable is consistent over the last six years.

Most people today see a mobile phone as essential. The BCAR report finds that data and call inclusions have increased significantly for mobile prepaid plans in recent years, which is in line with the trend that mobile plans on the market today represent better value for money, and give greater choice for consumers.

Over the four years to 2018, the price of prepaid mobile plans was down by almost 4 per cent per year, and post paid mobile was down 9 per cent a year.  

Yet at the same time phone plans are offering more.  In 2017-18, average monthly mobile data allowances for prepaid mobile were up 153 per cent on the year before (to 11.5 gigabytes or GB); for post paid mobile they were up 91 per cent (to 14.2 GB.)

The story is similar for fixed line broadband, with prices dropping 3.5 per cent a year between 2014 and 2018.

 NBN Co is working to deliver more affordable products to lower income households.  Last year it brought in a lower priced entry level 12 megabit per second (Mbps) product - designed to allow retailers to offer a $60 a month plan.   

The cost of phones and broadband services stands out compared to other areas of household spending.  Since 2000, the consumer price index is up 63 per cent - meaning the average household has to spend 63 per cent more to buy the same bundle of goods and services as twenty years ago.

But over the same period telecommunications costs have dropped by 6 per cent - at the same time as consumers are getting much more for their money.

Consider home broadband for example. Before the NBN came along, most Australians got home broadband using a technology called ADSL.  The speed was not guaranteed - and two thirds of people got less than 8 Mbps. A typical ADSL 2+ service in 2009 (including the compulsory payment of monthly line rental) cost $110 per month. It came with 45 GB of monthly data included.

Today the typical Australian gets their broadband over a 50 Mbps NBN plan, there is no monthly download limit, and they pay around $75 a month.  You get much faster speeds, you can download unlimited data and it costs much less - that’s a pretty big improvement. 

Sometimes it can seem like household expenses only ever go up.  But when it comes to broadband and mobile prices, the numbers are clear - we are paying less, and getting more, than we used to.  

Read the full BCAR report here.