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by Phillip Pearson.
Original Post: Vodafone 3G Broadband Early Termination math
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I'm wondering whether to sign up for a 3G data plan here. Doing some math to work out what the penalties for early termination are. There are some interesting discontinuities.
I'd probably get the 1GB data (+ $10 for a second GB if I go over that in a calendar month) plan, which has two choices:
- $24.95 for 6 months, then $49.95 for 18 months, with early termination fees of $400 in the first 6 months, $300 in months 7-12, and $150 after that.
- $200 for the modem, and $59.95 per month after that.
Working it out, the no-plan option is best if you're going to quit in the first 5 months. After that, the discounts add up to make the 24-month option cheaper. There are a couple of points where it's pointless to quit due to an upcoming reduction in early termination fees. It's cheaper overall ($599.40 total) to wait out the first year (quitting before month 13) than to quit in months 10-12. Likewise, it's cheaper overall to wait out the whole term ($1048.80 total) than to quit after month 20.
Interestingly, the $150 termination fee in months 13-24 exactly balances the discount over the first six months, so if you sign a 24 month plan then quit in months 13-24, the overall average monthly cost including the termination fee will be $49.95.
If the 3G connection is tax-deductible for you and you're in the 39c tax bracket, the "effective cost" per month is $27.08 if you quit after 12 months, or $23.70 if you stay for the full 24 months.
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