iiNet’s IPTV is three times the cost of Telstra’s


opinion Like any competitive industry, Australia’s broadband market has been characterised by a certain predictable dynamic for some time now.

First, customers become frustrated by the inflexibility of giant telcos like Telstra and Optus. Then, smaller and more nimble players such as iiNet and Internode move in, delivering innovation and slicing off customers from the giants’ sides like juicy sirloin steaks dripping with money.

After five years of this dynamic, I thought I could predict the market to a certain extent. But over the past month I have discovered that I was wrong. In this time, both Telstra and iiNet have revealed the details of their plans to launch internet television (IPTV) services into the Australian market.

But there’s something wrong with the picture. This time, it’s not iiNet producing the better product. It’s Telstra. Telstra has broadly matched the level of services offered by its challenger –- for about one third of the cost, and with less conditions.

Let’s start with the price. Both Telstra and iiNet have now revealed the initial pricing on their respective IPTV services which are both due to launch this month. Both are using set-top boxes to deliver their content — Telstra’s device is called the T-Box, while iiNet is badging its service as ‘fetchtv’.

Telstra’s T-Box will retail for a flat, stand-along price of $299 (or the equivalent over two years), with no ongoing monthly cost. Most of the content it provides will be free and will not count towards customers’ broadband download quota, with the exception of pay per view movies on demand and third-party services such as YouTube.

In comparison, iiNet’s fetchtv set-top box will cost customers $499 outright, plus a monthly access fee of $19.95, for a total cost over two years of $977.80. Customers also have the option of bundling the set-top box acquisition cost into a monthly $29.95 access fee (plus a $149.95 setup fee), for a total cost over two years of $868.75.

In short, iiNet’s fetchtv service will cost – at a minimum – almost three times more than Telstra’s T-Box.

Now obviously we’re not talking about a precise apples to apples comparison here.

For starters, iiNet’s set-top box includes three HD digital TV tuners, compared to two through the T-Box, giving customers the option of recording two channels while watching one, instead of recording one channel while watching one. In addition, the fetchtv box has a 1TB hard disk, compared to the 320GB hard disk on the T-Box.

However, there are also advantages on Telstra’s side which do much to balance iiNet’s technical edge out. Unlike iiNet, Telstra has not stipulated that customers will only be able to access IPTV if they own a certain ADSL router (iiNet’s BoB device) and only if they are connected to telephone exchanges where iiNet has dark fibre connected.

So that’s the price, now let’s look at the actual IPTV services offered.

T-Box customers will be able to access seven standard definition digital channels from Telstra’s BigPond TV division, ranging from a 24×7 news channel, to live horse racing, sports news, Australian Football League and National Rugby League match replays and news, V8 Supercars and music.

In addition, Telstra’s BigPond Movies video on demand service (pay per view) will be available, allowing customers to rent about 1,400 movies and TV shows online from launch, with a further 600 slated to be added by the end of this year.

Most of the major studios – such as Disney, Warner Bros., Sony, Paramount, Village Roadshow, Icon, Umbrella and Hopscotch – are on board. Several other content libraries available to users are BigPond Videos – a free on-demand service similar to YouTube, as well as the popular Google-owned video sharing service itself.

In comparison, iiNet appears to be focusing on bringing international television channels such as CNBC, the National Geographic Channel, BBC World News, MTV and the Discovery Science channel to its service.

It also has a video on demand service, including support from Hollywood Studios, Disney, Warner Bros., MGM and Village Roadshow, but as far as we can work out, its site does not say how many movies are available. And iiNet also offers another service that it calls “video on command”, including TV episodes and documentaries from studios like WarnerTV, as well as some games through its platform.

All in all, assuming iiNet’s video on demand service has the same level of movies that Telstra’s does, we’d be prepared to call the level of video services offered by the pair equal, with Telstra having a much stronger Australian slant and iiNet appearing to focus on bringing international content down under.

The final element in the puzzle is the cost of the broadband itself, which is required to deliver IPTV. Each company has locked customers into only using their own broadband service.

Let’s assume that a new customer with a small family signed up to each telco on a medium-level ADSL2+ monthly plan with a two-year contract and about 50GB of data quota included, with an associated phone line. The minimum cost of such a plan with Telstra – BigPond’s Liberty 50GB – would be $1867.80, according to BigPond’s site. It looks like the additional cost of an ADSL modem would be about another $100.

iiNet’s Naked Home 3 plan has similar specifications (but with an extra 10GB of quota) and would cost $1997.55 over 24 months, including modem rental. It includes the company’s iiTalk internet telephony service.

Overall, we consider that broadband plans from the pair are probably fairly even in price in the mid-range.

So let’s sum up the situation we have arrived at.

iiNet and Telstra are — at the moment — neck and neck when you compare a mid-range ADSL2+ plan for a family situation, and their internet video services will likely (at least initially) provide a fairly even spread of content to customers.

However, there is no getting away from the fact that iiNet’s fetchtv service will — at minimum cost — almost cost its customers almost three times as much as Telstra’s. And that will prove hard for iiNet customers to stomach.

Disclosure: Renai LeMay is a long-time iiNet customer and plans to remain so due to its stellar customer service, ethical stance as a company and commitment to innovation in the broadband market. However he also subscribes to a Telstra Next G mobile broadband service for on-the-road internet access. He currently uses an Optus iPhone.

He is unlikely to purchase either the T-Box or fetchtv products as he is entirely content with his Ubuntu Linux-based media centre.

Image credit: Chris Gordon, royalty free


  1. It’s important to note that FetchTV isn’t an iiNet product like the TBOX is a Telstra product. FetchTV is an independant 3rd party who happens to be selling the Fetch service & is the first ISP to do so- but the service offering, box & pricing is from Fetch and will be sold by other ISPs.

    • That’s true Bryn — but I don’t think that has much to do with comparing the service to Telstra’s T-Box. Customers don’t care who ultimately built the service or if it is a whitelabel etc — all they care about is how it works and what you get for what price.

      On these benchmarks … it’s hard to see fetchtv coming out ahead against the T-Box.

  2. This article was incredibly biased. How can you compare the tbox to fetch? Fetch’s $20/month gets you content similar to a foxtel base package or selectv package. The free content provided by telstra sounds likea joke and is already available to anyone on bigpond for free. You are trying to compare paytv with something that is more a competitor to channel 7’s tivo services.

    • If you read the disclosure at the bottom, Rhys, you’ll see that as an iiNet customer I’m actually more likely to be biased towards iiNet than towards Telstra ;)

      And I have to say, I have been pretty impressed by the free content provided by Telstra. Unlike iiNet, Telstra has invested in broadcast-quality TV production facilities and is already creating its own content through its own channels that are not available elsewhere. As an Australian, I am generally more interested in viewing Australian content rather than simply piping in content from overseas as iiNet is doing.

      There is also the matter of how many movies iiNet will have in its videos on demand library — the ISP has not yet disclosed this, but I have to say, I strongly suspect it will be far less than Telstra has available in its BigPond Movies catalogue … which has after all, been around for some time.

      I think overall throughout the article I have made assumptions favourable to iiNet (because we know a lot more about Telstra’s offering than we do about fetchtv yet). It could have been much worse.

  3. iiNet has since advertised that the $20.00 per month fee includes Movie Box;

    “Movie Box delivers titles from powerhouse Hollywood Studios, Disney, Warner Bros., MGM and Village Roadshow – that’s 7 fresh titles each week on demand at any time.

    Get movies when you want them, all in your library as part of your monthly fetchtv subscription.”

    • Interesting — this would certainly do a little to bring the iiNet offering up to speed with Telstra, at least on paper. I’m supposed to be having a demo of the iiNet offering tomorrow, so hopefully we’ll know more then.

  4. My problem with this is that Telstra can take a hit and turn the T-box into a loss leader, and also that it already has content deals via Foxtel

    This makes it harder for iiNet to compete.

    I too am an iiNet user, however, the need to use BOB is a deal killer for me. I allready have wifi infrastructure, with the older phone unit iiNet gave me (which I only got to get extra download limit)

    Ah, well

    • Same with me — there is just no way that I am going to buy a new ADSL modem because iiNet thinks I need it to use its IPTV platform. I appreciate that it makes the whole pipeline simpler for iiNet — but spending extra money when I don’t need to do so is not exactly something that I like to do for fun.

      • As a matter of interest, the response to “Why Do I need a Bob” on FetchTV’s FAQ was as follows:

        “We recommend using BoB™ because we can offer full fetchtv support and firmware upgrades for him. As fetchtv grows, we expect to see more modem manufacturers using fetchtv-compatible firmware”.

        I, like most of you, would not shell out extra bucks on a Bob for the sake of Fetch. I will wait on firmware if & when it’s available.

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