Just how free is 'free' when you buy into broadband?

As new services launch against a backdrop of hype and controversy, it gets harder to make the right choice

It was a busy week for broadband, and a bruising one too.

As pay-TV broadcaster Sky pitched into the "free" broadband market, the Advertising Standards Authority (ASA) rapped rival provider TalkTalk on the knuckles for misleading consumers in parts of its television and print publicity, and in a CD promotion.

Most of the big broadband providers also locked horns - chiefly in response to the Sky launch - and swamped newspapers, magazines and television stations with ads in a frantic bid for customers.

But the ASA ruling will make providers think carefully before emblazoning the term "free" across future promotions.

In the case of TalkTalk - which is owned by The Carphone Warehouse - the advertising watchdog has curbed its use of the word "free" after receiving 145 complaints from the public and rival companies, including BT and Tiscali, about its ads.

Three complaints were upheld: that it was misleading to use the word "free" when a host of other charges (see the table) were applied; that its "free broadband forever" claim was misleading; and that the geographical reach of the service wasn't made sufficiently clear.

As a result, TalkTalk must water down its claims.

In the first case, the company must now replace "free" with "inclusive" when promoting its Talk 3 International telephone package, which allows customers to surf the web at high speed without charge.

Second, the "free broadband forever" slogan is to be dropped. Third, TalkTalk must make it clear that its deal is only available in 70 per cent of the UK.

However, consumers will still see TalkTalk advertising a "free broadband" package. Industry rules for telecoms promotions determine that the word "free" can be used when the service is an add-on to an existing deal.

The ASA could clamp down on Talk 3 International because it was, in effect, a new telephone calls package deliberately set up with broadband. However, TalkTalk also offers a separate calls package called Talk 3. It has now decided to use this existing deal to advertise the newly added-on broadband as "free".

The cost of this package - with unlimited telephone calls to UK landlines - is £8.99 a month plus £11 line rental.

Unlike its Talk 3 International counterpart, there is no connection fee but the same 18-month contract and disconnection fee of up to £70 apply.

"We are keeping a watching brief on the use of the word 'free'. The ruling on Carphone Warehouse applies to everybody," says an ASA spokesman.

The ASA has not received any complaints about a rival Orange offer that has been advertising itself as "free" broadband, he adds. This is understandable since, in line with the ASA rules, the free offer was launched two months ago as a bolt-on to a number of existing Orange deals, although customers signing up for the service may need to extend their current contracts to qualify.

Sky's entry into the "free" broadband market had been widely trailed but the terms took many of the switching websites by surprise. Its "Base" deal (see the table) - the simplest of the three new internet offers on the table - is described as "genuinely free broadband" by Tim Wolfenden of uSwitch.

But as usual, terms and conditions apply. To receive its basic broadband package - a 2Mb speed, fast enough for music downloads - free of charge, you need to be an existing Sky customer. And its most basic TV package costs £15 a month on a minimum 12-month contract.

There is also a one-off £40 "activation" fee to pay, and if you're not confident about installing broadband in your home, it will cost £50 for a technician to come round and do it for you.

As with all these deals, you must first be within reach of its broadband coverage. Today, Sky's service - which is being pumped around the country through its own cables - only covers 28 per cent of British homes, largely in London, Birmingham, Man-chester, Edinburgh and Glasgow (go to the website below to find out if you can receive the service). It hopes to cover 70 per cent of the country by the end of 2007.

"The Sky offer could affect the broadband market dramatically because it has four million customers who are currently with other providers," says Mr Wolfenden.

"Very soon, [these people] are going to be able to turn around [to their existing broadband provider] and say 'why should I carry on paying for my internet connection?' "

Sky customers not covered by its broadband network can sign up to a separate, faster deal called "Mid". This will be available over rented BT lines for £17 a month. This has an internet speed of up to 8Mb - enough for film downloads and online video gaming - and you can store up to 40GB of material online.

Alternatively, this deal is open to all those Sky customers covered by its broadband network for much less - £5 a month.

The third strand of Sky's broadband assault is its "Max" option. Again available only to those receiving its broadband coverage, a monthly £10 gets you a speed of up to 16 Mb and unlimited downloads of digital files such as films and music.

With each of these three options, an extra "bundled" deal allows unlimited landline phone calls for £5 a month, though you do need a BT landline.

Karen Darby, the chief executive of the SimplySwitch website, says she had hoped Sky would not have " tied customers in for a year" and instead agreed to allow shorter contracts such as those offered by Virgin.

"Bundled products are generally not suitable for all users, and those who do not want a TV package [with their broadband] should look at some of the many competitively priced alternatives available."

With Vodafone and other providers set to bring their own broadband deals to market, she expects more innovative offers and "to see prices fall even further over the next 12 months".

With any broadband deal, always scour the small print to check the length of the contract and whether the provider imposes any disconnection fees.

And always make sure you choose a package that suits you: there's no point getting a super- fast broadband speed of 8Mb if you only go online to shop and send emails.

WHAT'S THE DEAL WITH THE NEW BOYS OF BROADBAND?

Provider Contract length 1st-year cost 2nd-year cost Package

TalkTalk/Talk 3 Int'l
Contract length: 18 months
1st-year cost: £281.87
2nd-year cost: £251.88
Package: Up to 8Mb speed; £20.99 monthly phone deal; £29.99 connection charge

Orange
Contract length: 18 months
1st-year cost: £360
2nd-year cost: £360
Package: 2Mb speed; £30 monthly phone contract; £11 monthly line rental

Sky Base
Contract lentgth: 12 months
1st-year cost: £220
2nd-year cost: £180
Package: Basic deal 2Mb; £15 TV deal; £40 activation fee

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