Save £203 A Year With A Dongle

Mobile broadband dongles have hit the shops in force. What are they? Do they provide good value for money? And more importantly, is this the death of the home phone line?

A couple of weeks ago during our weekly editorial meeting, I mentioned that I had a burning desire to write an article about dongles. And, not surprisingly, I was met by looks ranging from curiosity to downright bewilderment.

Still, it woke up a sleepy head or two.

If you've no idea what I'm talking about, you're not the only one. In truth, 'dongles' are part of a new wave of mobile broadband innovation, bringing wireless connectivity beyond the walls of your own home.

Dongles eliminate the need for a costly fixed phone line, allowing you to access the internet from wherever you are, with no plugs or cumbersome wires involved.

Measuring about the size of a computer mouse, you plug it into your computer via a USB port, and if there is a 3G signal, you can start surfing almost straight away. 

It couldn't be simpler.

Dongle Decisions

So, that's how dongles work, but are they for everybody? And more importantly, do they provide good value?

Dongles are hot news at the moment, with many journalists claiming they could render the home phone line obsolete. I reckon this is a slight exaggeration, as unless you're happy making all your calls on your mobile or are savvy with a program like Skype, I wouldn't give up on the traditional dog and bone just yet.

However, if you don't have a home phone line, or are unable to get broadband access, a dongle may be the answer. Students who move around a lot during their time at university and may need internet access on their computer both at home and away, may particularly benefit from this new technology.

In fact, with BT charging up to £124.99 for a reconnection or to set up a new line when you move home, dongles could be a viable alternative to anyone who hasn't already got a BT phoneline in their home.

Here's a quick look at some of the deals available at the moment:

*Fair use policy applies.

As the table suggests, mobile phone supplier 3 currently offers the best value for money. If you sign a 12 month contract, they will also give you a free dongle and a data allowance of 3GB.

According to 3, that's the equivalent of sending about 2,000 plain text emails, 100 hours of web surfing, and downloading 100 two minute videos and 200 music tracks.

However, price isn't everything when it comes to the broadband market. If download speeds are your thing, Vodafone offers the fastest option, with speeds up to 7.2Mbps, meaning you could download an mp3 track within a matter of seconds.

If you don't mind settling for a slower speed and er, a less aesthetically pleasing dongle, then Vodafone's USB modem offers speeds of up to 3.6Mbps, and comes free with a 24 month contract.

The Traditional Route 

Let's compare this to the cost of going by the more traditional route and getting a fixed phone line plus broadband package.

If, for example, you opted for BT's Broadband Option 1 package, you would pay £8.95 for broadband for the first six months and £17.99 thereafter (on an 18 month contract). You would also pay £11 a month for line rental.

That works out to be £26.73 a month* - plus, if you had to set up a new phone line, you'd also have to fork out a £124.99 activation fee.

That's £383.25 a year*, compared to £180 a year for the cheapest dongle.

On face value, the traditional route seems much more costly than surfing the web with a dongle. In fact, BT's package could cost you £203 a year more than a dongle. However, with the BT deal, you do get the benefit of having a home phone line with free evening and weekend calls attached, along with a download limit of 5GB.

In addition, with BT, you can set up a wireless network in your home. This means that unlike a dongle which has only one connection point, more than one device can be connected to the internet at any one time. Again, it is a matter of preference.

Broadband Limitations

One very important point to bear in mind with dongles is that if you go outside your allowance, the charges can be high. Although data limits are not uncommon among traditional broadband packages, they are usually a lot more generous than dongle plans. If you're not careful, you could end up with a nasty shock when your bill hits the doormat at the end of the month.

Vodafone imposes a £15 charge for every gigabyte you go over your 3GB allowance. In addition, 3 charge 10p per megabyte over the 3GB limit. This can quickly be exceeded if you regularly download films, as the files can be as big as 1GB per movie, depending on the encoding.

In fact, all of the dongles currently on the market have a usage limit of around 3GB. For heavier broadband users, 3's Broadband Max package offers a higher usage limit of 7GB, but will set you back £25 a month.

The Art Of The Deal

One other thing worth pointing out is that the best deals available come attached with longer contracts.

Broadband charges have lowered significantly in recent years, as competition between different providers increases. But alongside lower prices, minimum contract lengths have also slowly been creeping up, with 18 and 24 month contracts slowly becoming the norm.

Two years is a very long time in the broadband market, and signing a contract for such a significant amount of time could mean you end up stuck with an uncompetitive deal you can't shake off without paying a hefty penalty.

For example, T-Mobile and Vodafone have both cut their mobile broadband prices recently. Only a few months ago, you'd be paying £20 a month for T-Mobile broadband and £30 if you signed up with Vodafone. Both deals have subsequently been reduced to £15 a month.

So if you've caught dongle fever and are absolutely itching to geft your hands on one, bear in mind that as with all new gadgets and innovations, the market is likely to become more competitive in the future and prices will eventually come down. Think carefully before committing to a long contract, as you will be tied to it for the entire term.

Still, it looks like dongles are here to stay. So like the rest of the Fool editorial team, you better stop sniggering when you hear about them. They may have a silly name, but they could still potentially save you hundreds of pounds.

*cost spread over 24 months

More: Six Steps To Cheaper Broadband / Cut The Costs Of Your Mobile Phone