iiNet’s NBN costs “similar” to ADSL

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National broadband provider iiNet today described the costs of connecting customers to the National Broadband Network as being similar to that of existing ADSL broadband services, breaking ranks with industry rivals who have complained about what they see as NBN Co’s extortionate pricing model.

In a financial results briefing this afternoon, the company’s chief executive Michael Malone said the release of iiNet’s commercial NBN pricing was “imminent” and would arrive in “weeks, rather than months”, following on from the launch of NBN pricing by rivals Internode and Exetel over the past month.

Malone didn’t provide any further details about what precisely iiNet will charge customers to connect to the predominantly fibre-based network. However, company briefing documents released today contained a slide which stated iiNet’s current costs for connecting customers to its own network were “similar to [the] proposed NBN” costs — at around $32 or $33 per month.

However, the costs came down dramatically, the slide revealed — from about $57 a month — for customers who were not currently using iiNet’s own network but were connecting through the ISP’s resold services from telcos like Telstra or Optus.

The statement puts iiNet at odds with Internode, which has consistently criticised NBN Co’s pricing scheme, arguing it would not allow smaller ISPs to compete nationally.

Several weeks ago, Internode became one of the first ISPs to launch commercial NBN pricing, with the company offering ‘bundled’ plans which come with a telephone connection and prices starting at $59.95 a month and ranging up to $189.95 for a plan with 100Mbps speeds and a terabyte of quota.

Although many of the plans are comparable in price to current ADSL services at similar speeds, the company’s prices have already been attacked by the Coalition, with Shadow Communications Minister Malcolm Turnbull claiming the pricing undercut the argument for the NBN.

For a naked DSL broadband plan with an included Internet telephony line and speed of up to 25Mbps, iiNet currently charges between $69.95 a month and $119.95 a month. At the same speeds, the prices are comparable to Internode’s NBN pricing plans, although as you increase the speeds up to 50Mbps and then 100Mbps, costs go up. iiNet’s current NBN pricing in Tasmania ranges from $29.95 a month up to $99.95 a month, but these prices don’t reflect commercial NBN pricing.

The only other major ISP to have so far revealed commercial NBN pricing is Exetel, which significantly undercut Internode when it released its plans several weeks ago, with the cheapest option starting at $34.50 a month and the most expensive topping out at $99.50.

In a broader sense, on ADSL broadband pricing, iiNet’s Malone pointed out that currently, prices on broadband tended to “hold steady”, with customers paying more or less the same amount on an ongoing basis for broadband — but getting better value courtesy of increased download quotas or value-added services. “Five years ago they were getting 10GB for $50 and now they’re getting 200GB,” Malone said.

Image credit: iiNet

36 COMMENTS

    • Certainly, not unexpected – (unless you ask the usual suspects around here who’ve never worked in the industry and think they know how it all works).

      • Going off topic but you made the point in the first place.

        How do you know the ‘usual suspects’ have never worked in the industry?

          • Alain, I know Michael and I know that he *does* work in the industry. If you also do, why not say so, even if it’s just company X or company Y in the past etc? Or why not post under your real name if you can, as Michael and I do?

            I agree, you are being unnecessarily defensive — although of course Michael’s initial comment was a little provocative ;) He has that gift ;)

          • “Have you worked in the industry?”

            Yup. I worked as a sysadmin for an ISP called AusISP for a year or so after the dot com boom. We sold dial-up for 1.1c per minute, if I recall correctly, from a shitty office in St Leonards. I applied for a job at One.Tel and got knocked back. I also worked as a sysadmin for David Jones (not as relevant) and as a cadet tech analyst at PWC.

            None of this would mean jack today, of course, but I have worked in the industry in some sense ;)

          • “Alain, I know Michael and I know that he *does* work in the industry.”

            I don’t really care if he works in the industry or not, he could call himself Santa Claus, I and others would still respond to his posts in the same way.

            The point is therfore moot, I just wondered what the motivation behind stating ‘the cannot be proven anyway’ was in the first place?

            It’s much like posters who make the accusation that if you don’t support the Labor NBN plan therefore you must be affiliated with the Liberal Party.

            ” Or why not post under your real name if you can, as Michael and I do?”

            I have had this discussion before, all posts are without substance unless you post under your real name?, you might as well get a refund on Disqus then and shut down the comment section.

            “I agree, you are being unnecessarily defensive”

            Not defensive at all, I raised the point how he deduced that all anonymous posters in Delimiter that have the gall to disagree with him ‘do not work in the industry’ – he doesn’t know of course, so the point is made.

  1. So Internode’s network is just not premium the price is platinum. iiNet and Exetel have the reasonable pricing that we all expected, how did Internode or more specifically Simon come up with such outrageous figures?

    • To be honest I think Simon’s figures are more realistic than those of the other companies; iiNet can afford to cross-subsidise a little while I read Exetel’s pricing as sheer bravado.

  2. So Internode’s network is just not premium the price is platinum. iiNet and Exetel have the reasonable pricing that we all expected, how did Internode or more specifically Simon come up with such outrageous figures?

    • Cause Simon’s playing the lobbying game while he still can. With the CVC rebate, early connections make no material difference to an ISP’s bottom line so there’s clearly some huffing and puffing going on.

      The problem is – the tactic exposes him as a corner shop operator that’s going to get steamrolled in this poker game.

      • the problem is he may be right, he may be wrong. its a bit before we can tell, i think. I am waiting for pricing from a resell service to pop up as that will be what makes or breaks the argument Simon is working off. if it is closer to the ‘off net’ column in the iinet slide, those costs will be harder to work with as a smaller operator than one of the larger ones.

        if it is closer to the 32-33 bucks per port in the other two columns though, that would suggest it is reasonable to think the all up costs for resold NBN will be in the ballpark of existing costs… CVC will add some but on cost for connect basis that would offer some hope for aggregate class operators?

        again, need some reseller figures to compare against first, i think.

  3. “The statement puts iiNet at odds with Internode, which has consistently criticised NBN Co’s pricing scheme, arguing it would not allow smaller ISPs to compete nationally.”

    While I’m pro NBN you premise is flowed iiNet is 2nd/3rd(depends on who you ask) largest ISP so their pricing won’t reflect the issues Internode have been trying to raise.

    • iiNet are the number two “ADSL provider”. They are not number two when you add Optus’ cable subscribers on top of their ADSL subscribers.

      iiNet have not claimed they are the number two ISP – although their advertising could certainly be construed that way – whether they meant that or not is another thing.

  4. This is kind of pointless, because iiNet’s business model is one that mirrors the business model that NBN is forcing due the structure of the CVC tax

    Its companies such as TPG that will be unable to offer sustainable ‘unlimited’ at prices of 59.95 that would be effected most by CVC charges, and not companies like iinet which ask $100+ for a terrabyte of data

    • that $25 diff btw $57 off-net and $32 on-net probably reflects the fact that all their DSLAMS are in zone 1 while they lease TW/Optus for other zones which are steeper in price (incl. backhaul). the fact that the NBN pricing structure is equivalent to zone 1 access costs tells you that NBNco is massively discounting their service (well below costs) to allow ISPs to transition their ADSL customers without political fall-out from pricing.

    • the reason why Internode is jumping up and down about CVC while iiNet, TPG, etc have remained silent is because iiNet and TPG are publicly-listed companies. if the CEOs of these companies started making noises about how the NBN is too expensive to use and threatens their retail margins, their stocks will dive. Internode can afford to complain on the loudspeaker about how long-term NBN pricing will impact its profitability because the shareholder is running the company.

      also, presumably, iiNet’s projected NBN access costs factor in the “transitional” 150Mbit CVC holiday which is a pretty significant concession by NBNco. (as a crude calculation: 150Mbit x 200 CSAs = 30,000Mbit @ 0.05Mbit/AVC = 600,000 customers.)

      • “Presumably” iiNet’s Michael Malone knows what he is talking about, since he is running a large, successful company and you are not.

        It gives me amusement to see you scramble for quick talking points, Tosh, when the argument doesn’t go your way.

        • and obviously Exetel’s CEO has no idea what he’s talking about either when he says NBN is more expensive than even TW.

          it gives me amusement to see you avoid engaging in discussion of points i have raised, but rather resort to ad hominems such as “scramble” and “quick talking points”. :)

    • Any talk about NBN “forcing” a business model, and the loose talk about a “CVC tax” is unbalanced without the other side of the picture.

      And that other side is that the current haphazard, makeshift market, formed by the lopsided influence of Telstra and numerous other factors that have accreted onto the industry ITSELF forces certain business models into being, while discouraging others.

      Current market arrangements have grown out of this unequal, unplanned, unbalanced approach. Any significant action to balance the market and remove the unique influence of Telstra as a player will naturally bring about change. That’s inevitable.

      You can’t just present change as negative because some settled, complacent arrangements are upended. Change brings positive outcomes when it is founded in greater equality, fairness, openness and transparency.

      We’ve barely begun round one of the pricing skirmishes, and the competitive juices have hardly had a chance to kick in. I’m confident that we will see far more competition than before, and more interesting ways of packaging services in years to come.

  5. is it just me, or are Renai’s posts only showing up in RHS box, but in thread itself. weird.

    • Ah, shit. I was posting using the WordPress app on my iPhone, which I doubt has synchronised properly with Disqus. Fail. I’ll try and re-post them.

  6. Of course just saying the costs are virtually the same does not mean anything until we see the full list of commercially released iiNet NBN retail plans.

    At present their NBN section of the site just says selected iiNet customers can trial it for free until October.

    • Definitely. To be honest I don’t really expect iiNet’s commercial NBN plans to be cheaper than Internode’s — I think they will be about the same.

  7. Only 12.5mbs and possibly 25mb/s is gonna be the same. 50mbs and 100mbs is likely to be 3 to 4 time the price.

    At the end of the day someone is gonna have to pay 40billion + interest + retail running cost + 10% retail margin over 30 years.

    40billion alone equates to ~ 45$ per month over 30M retail customers (business & home)

  8. Only 12.5mbs and possibly 25mb/s is gonna be the same. 50mbs and 100mbs is likely to be 3 to 4 time the price.

    At the end of the day someone is gonna have to pay 40billion + interest + retail running cost + 10% retail margin over 30 years.

    40billion alone equates to ~ 45$ per month over 30M retail customers (business & home)

  9. all of this is moot if you don’t know the contention ratio.

    comparing exetel, iinet, internode price points and against anecdotal performance claims is at best just plain ole pub talk.

    I challenge MM, Hacket, Linton, the other players to publish. Yep you guys don’t have the balls because you know how disgusting the ratio is. Some of peers have related that a certain ISP with one of the lowest price points is running thousands of customers:to 1 mbps of bandwidth.

    Real transparency and unit pricing is required in the industry and that starts with requiring providers publishing their contention ratios (and not just a national average) by PoP/PoI/PoA.

    You know I’ve seen PoPs supplied with just a couple of mbps (on UBR QOS to boot). no wonder customers complained.

    • There is an actual limit to customer ratio, at least the last mile end, the maximum per splitter is 32 users, which brings to about 78Mbit maximum if all users signed up to 100mbit, which is 10x better than any FTTN or ADSL scenario.

      The bandwidth to the POI if I am correct, maybe different issue.

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