Owning the mid-range: Internode chops NBN prices


news National broadband provider Internode has substantially modified its National Broadband Network pricing on the eve of the launch of commercial services on the fledgling fibre infrastructure, cutting the prices on some of its plans and delivering extra options to customers in other areas.

When the company unveiled its first tranche of NBN pricing plans in mid-July this year, it was the first to do so. At the time, the company’s plans at certain tiers, especially the 25Mbps speed level, were seen as comparable to current ADSL broadband pricing. However, the company also came under fire due to the high cost of its top-level plans, which ranged up to $189.95 for a 100Mbps plan with a terabyte of data quota.

The new plans unveiled this afternoon have seen between $10 and $30 a month cut out of most of the company’s plans. The cuts have had the effect that Internode’s highest plan no longer reaches towards the $200 mark, with the same 100Mbps terabyte plan now costing $164.95. In addition, Internode has cut its 200GB quota plans out, replacing them with 600GB options that now sit squarely between its 300GB and terabyte plans.

The net effect of the changes, according to Internode, is that the 200GB tier of plans have had their quota increased to 300GB, while the previous 300GB plans have have their quota doubled to 600GB. The pricing differential between the company’s previous 300GB plans and its new 300GB plans is substantial. Unlike most other ISPs offering NBN services, Internode does not force customers to use their quota in certain on- and off-peak periods. However, as with other ISPs, once customers have exhausted their data quota on the Internode plans, their connections will be speed-limited until they increase their quota or the end of the monthly tracking cycle arrives.

Internode has also removed the requirement to bundle a voice telephony service with a broadband plan, allowing customers to take a voice service as an optional extra that starts with a zero dollar monthly line rental ‘pay as you go’ plan and ranges up.

In an emailed statement, Hackett said a lot had changed since Internode first released its NBN pricing in July. “Those changes include significant improvements in the pricing model for NBN CVC access during the initial ‘ramp-up’ years of the NBN rollout that have allowed us to reassess both our price points and the pricing structure that we are deploying for the commercial NBN commencement point (October 2011),” he wrote.

“The new pricing un-bundles voice services, improves quota value in the mid tier of the plan table, and reduces the cost differential to access higher speeds.”

“It retains the ‘use anytime’ aspect of Internode plans, and its important to appreciate that a peak/off-peak pricing structure versus a use-anytime one reflects a situation where “5+5 (when your ISP says you can use it)” really is NOT the same as ’10, anytime”. For instance, a 600GB ‘use anytime’ quota is a pretty good match for a “500GB on peak / 500 GB off peak” plan, in the real world.”

Internode will also offer customers discounted prices on three of its fibre-ready broadband routers when they sign up for an Internode NBN service – including $50 off the price of an entry-level Netcomm router or $100 off the cost of one of the company’s flagship Fritz!Box routers. The new NBN plans may be ordered now, and will be deployed starting from next week.

“Existing Internode NBN trial access customers across Australia will be contacted by Internode over the coming few months to change them over to their choice of plans from this commercial plan set,” the company said.

Internode’s new NBN plans:

Internode’s old NBN plans:

Well, we asked, and Internode delivered. Reaction from Whirlpool commenters to the new Internode plans has so far been universally positive, and I have to say the company’s 300GB monthly plan at 50Mbps for $84.95 is looking very tasty. I would now say that Internode’s plans are quite competitive with the plans released by iiNet and Exetel, and they clearly blitz Primus’ dated options out of the water.

Furthermore, with the release of its plans today, Internode has clearly identified what was a significant weakness in the plans being offered by its competitors: The mid-range. iiNet, Exetel and Primus don’t really offer plans with data quotas between about 200GB and a terabyte. But Internode does. It has a very nicely priced range of 300GB plans, and a significantly tasty bunch of plans at 600GB for $20 extra a month.

I personally have no doubt that data usage in an NBN fibre world will increase quite rapidly, and Internode’s new plans seem aimed at that scenario much better than the plans of its competitors, which seem aimed primarily to match current ADSL pricing options. In this sense, Internode is the only real ISP to have started to escape the ADSL framework trap which I have been writing about in recent weeks.

Another interesting factor when you consider the difference between the two major ISPs, iiNet and Internode, comes down to whether you agree with Internode’s idea that quota which can be used at any time is better than on-peak/off-peak divided quota.

To illustrate this point, if you look at iiNet’s pricing, you’ll notice that it has just two plans which geeks and families would consider viable options – a 100GB/100GB plan, and a very nice looking 500GB/500GB (at 100Mbps, it costs just $99.95 a month) plan. The 20GB/20GB plan probably doesn’t have enough quota for those scenarios at this point – especially in a fibre world.

What iiNet is betting on is that customers will be willing to sacrifice their ability to use their quota at any time, for cheaper prices. But what Internode appears to be betting on is that customers will pay a little more to be able to use their quota at any time of the day or night. It’s a fascinating little debate – but again I have to come down at the moment on Internode’s side. iiNet’s meat and potatoes is clearly going to be in family situations where the household just wants enough quota to “be safe” and not to have their connection shaped or forcibly upgraded.

But iiNet’s plans don’t currently offer families enough options for that scenario – whereas Internode’s more flexible quota system and wider range of mid-range plans do.

Of course, at the really high end, if you’re willing to accept its on-peak/off-peak restriction, iiNet is still slaughtering Internode. iiNet’s 500GB/500GB on-peak/off-peak plans are still dramatically cheaper than Internode’s non-time-limited plans — $65 a month cheaper, at the extreme terabyte level at 100Mbps. If you want to pull down 600+ gigabytes of data per month, and you are smart enough to be able to schedule your downloads for the wee hours of the morning, iiNet is still a better bet than Internode.

The other interesting thing about Internode’s plans is that they also appear to undercut Exetel slightly in many areas (typically about $5, but quota is a bit different), depending on whether you include an extra modest telephone line rental charge. Of course, Internode’s plans don’t go as low as Exetel’s at the low end, and Exetel’s don’t go as high as Internode’s at the top-end, but in the middle, it’s a very even match.

This is a fascinating scenario as Internode is usually more expensive than Exetel, which is seen as a cut-rate provider. If Internode can challenge Exetel and iiNet in the mid-range, which is where we’re betting most of the NBN business will be, the ISP should do very well indeed. Internode’s position here also leaves very little space for Telstra and Optus to come in to the mid-range. I expect both will focus highly on bundling NBN services with mobile plans. Otherwise, I doubt they will be able to compete strongly with the other ISPs. Their costs are usually too high.

Image credit: Internode/stock photo


      • It looks like already a race to the bottom… soon they will just hang up on you will you need to call their cal centre for support…sounds familiar?

        Price competition , if you know your economics is not always healthy, half the time its non conducive to a market.

        • we need competition, we need competition…

          oh, but it’s not always healthy to have competition…rolls eyes…

    • I think that may cost a pretty penny … but you would have to wonder why it’s not possible, if a reasonable usage policy was introduced.

      • Give it some time. All the RSPs are going to be treading nice and carefully at the start.

        Within 12 months someone will do it – my bet is TPG or Dodo.

      • Unlimited with a reasonable usage policy really isn’t unlimited. Didn’t Exetel offer “unlimited” then kicked off the users that used more than others?

          • If some ISP gets a cheap unlimited NBN plan it can go on my list of ISPs to avoid. Been on an ISP when they offered a cheap high volume plan, didn’t do much for the network, in fact it sucked big time. Thank goodness TPG did their unlimited plans and they high volume users moved on and the network was usable again.

          • We weren’t talking about price. We were talking about “reasonable usage policy” with respect to “unlimited”…

            …given the low cost bases of both TPG and Dodo, I am merely suggesting they are best placed to provide an “unlimited plan” – (regardless of the price) – than most other ISPs.

          • Oh sure, I’d agree with that. Any ISP that doesn’t give a crap about the performance of their network could be an unlimited contender ;)

          • “If some ISP gets a cheap unlimited NBN plan it can go on my list of ISPs to avoid.”

            But if it came from iiNet or Internode … I would personally be quite interested.

          • I doubt they would do it. Do you really want to attract the 5% of users who results in 60% of your costs? Michael Malone said those were the user he tried to encourage to go to his competitors.

          • TPG took a gamble when they bought Pipe, so they can now offer cheap unlimited plans; they business model is no exactly healthy.

            It just means that with any market shock, TPG can be exposed, as I am sure they took out big loans to raise capital to purchase pipe.

            All it takes is recession, and they will be out of business.

          • Im not sure what you mean by TPG’s business model being unhealthy, they are one of the most profitable ISP’s currently (only being beaten by iiNET iirc).

            The reason why they could be in shock is due to government intervention (the NBN) which isn’t really their fault

            And buying PIPE wasn’t a gamble at all, they actually own infrastructure on the local, national and international level which makes TPG one of the few (if only) ISP that can actually offer sustainable unlimited

        • Australia is a different ball game when it comes to broadband because of the tyranny of distance. England doesn’t really have the same land mass as we do.

        • It’s not really unlimited – it’s ‘unlimited’. They heavily throttle P2P and newsgroups (on the default port) and have major issues with jitter for gaming. There are daily peak/off peak limits before speed restrictions are put in place (other than the p2p restrictions) – and it’s not really £25. It’s £35 + £13.90 for a phoneline, or £45 without a phoneline.

          If you take ‘historical’ exchanges rates into account (instead of the quite strange £1GBP = $1.50-$1.60 at the moment) that’s more like $90-100. And I’d rather pay $100 for FTTH and not have my usage controlled to the nth degree with proper latency and 10Gb a day (!! That’s heaps !!) than VM’s shoddy jittery HFC-but-marketed-as-fibre-lies service.

          (former tasmanian in the London for 4.5years)

    • Or at least have unmetred local content. I can’t see how anyone could afford to provide unlimited plans at 100mbps when the bulk of content is hosted overseas. Can you imagine how much it would cost the RSP?

      • “Or at least have unmetred local content. I can’t see how anyone could afford to provide unlimited plans at 100mbps when the bulk of content is hosted overseas. Can you imagine how much it would cost the RSP?”


        This is why iiNet is trying to bulk up as much local content as it can at the moment. The Freezone saves it a stack of cash as well.

    • Unlimited at 100/40Mbps is ~32TB/month.

      There has recently been some discussion on whirlpool about the revival of Internode’s flatrate plan. I perceive the problem as too many leechers and low end users can get better value with the standard plans.

      What I’m really disappointed about is the speed tiers which is the enforcement of an artificial speed cap on the RSPs. 50% connecting at 12/1Mbps will do more to hold back the future than quotas. At least there is a reason for quotas.

      • That assumes that users of Unlimited Plan will, in fact, use their connection all of the time. This is a blatantly false assumption, although yes there may be one, maybe two users, per POI, that do this.

    • Unlimited (with an appropriate delivery of services) isn’t going to be financially viable on the NBN due to CVC, even on the lowest speed tiers

        • I agree. “Unlimited” is simply a marketing term, and in most cases of the proper use of the term simply means “we have set-up the network on the assumption, based upon historic usage trends, that you will use approximately this much data per month.”

          It does not, and will never mean, you can download at the full potential of your connection all of the time. Nor does it actually require you provision an insane amount of CVC.

          What it does require, however, is an understanding that if you are the only one doing it on the market, you will likely attract leechers, and you need a policy to deal with them.

          In other word, Unlimited plans are only considered a problem because historically in Australia, no one has done them.

          • Unlimited only became available (talking about things like TPG here) on a sustainable level when all ISP’s had the ability to abolish CVC style pricing (back then it was Telstra’s AGVC). TPG only had the ability offer sustainable unlimited after it bought out PIPE, and put backhaul to all of Telstra’s exchanges and used ULL/LLS

            This is no coincidence, you put a charge (or a tax) on a resource, and it makes it more expensive. Thats what the CVC is, thats what its designed to do

            Markets only develop when they are “free” (with the best definition of the word), such as replacing infrastructure with their own to make services cheaper. The CVC is not a free market mechanism, its a mandated national charge on internet quota. Unlimited became possible due to Australia moving away, not approaching this model

          • Nothing in what you said, or in fact intrinsic in the model itself, actually prevents Unlimited Plans from existing in a CVC pricing model. They are just more difficult to provide in this circumstance.

            You might want to note that the AGVC pricing model prior to loop unbundling was more complicated and less fine grained than CVC, and a lot of the problems AGVC provided may actually not apply to CVC. Take this rather verbose explanation from Simon Hackett from late 2004

            In particular you may find this part interesting:

            PVC costs, being charges, by the committed megabit (i.e. by pipe size) to move data down that port between Telstra and ourselves. These are sold in large multiples of various sizes (2, 4, 8, 16, 32, 64, 128 megabits), so that its impossible to buy exactly the size you need for your peak demand. Instead, you have to buy the next size ‘up’).

          • AGVC is actually simpler, not more complicated than CVC. CVC has to deal with ~121 POI’s, AGVC only has like 4 or 5 POI’s (or Telstra’s equivalent of them) which reside in capital cities

            And by impossible, I mean financially unviable. At least its a butload more expensive then currently, which doesn’t help the NBN case. Several ISP’s have already stated that NBN pricing will make unlimited plans unrealistic

          • In the short term, yes, that is a given. However, the CVC prices are set to drop over the next few decades remember?

            Also, are you ignoring the comment on PVC? You have to buy in specific size tiers with AGVC, with CVC you don’t, you can buy only as much as you need.

          • Actually, I suspect at the lower speed tiers we will see some unlimited going on.

            Also, have you ever considered the on-peak off-peak scenario, where off-peak is unlimited, but on-peak not?

            Not technically an unlimited plan, but allows for something that appears similar.
            (god knows with all that over-provisioned off-peak CVC there will be LOTS of room for massive quotas off-peak. Indeed, since TPG does this to a certain extent now, I suspect we will see more of this when they release pricing)

          • TPG doesn’t provision unless they are forced to resell on Telstra infrastructure (in regional areas). They do not purchase CVC (or any type of “contention charge), they go through ULL/LLS, which just offers a base price for the connection (and thats it)

            TPG owns all the infrastructure (local, national and international) which means the cost for them to provide unlimited is trivial compared to other ISP’s

            Of course all this is thrown out the window when you introduce a mandatory national charge, aka the CVC

    • Dude, this is only the beginning. Look at what happened to the tablet market with Amazon’s Kindle Fire. It took less than a year and a half to get tablet prices down from $500 to $200, where Amazon’s margins are razor thin (possibly even losing $10/unit according to isuppli, but unlikely given Amazon almost certainly negotiated favorable manufacturing contracts).

      Every ISP on the NBN has the exact same input and maintenance costs. Size of company can provide some scale advantage, but there are many large companies out there capable of taking advantage of their own scale.

      I’m sure Internode would like to be the “Apple” of the NBN ISPs, providing premium priced services, but they’re going to have to offer a lot more than just good customer service. This is the price-based competition that a government run NBN promised.

  1. This price reduction is just free good publicity. Timed to perfection for the launch of the NBN, am I the only one who sees this?

    • I think that is pretty much what Internode have been planning for ;) However, as a journalist, I would note, launching new stuff on the Friday night before a long weekend doesn’t really get you much free publicity ;)

  2. unfortunately ifv optus and telstra are retailing below iinet and internode

    it will be only a matter of time til iinet and internode , complain they are losing their profits

    • The difference this time is that Telstra pay the NBN Co for wholesale access just like the other RSPs do. Currently, Telstra set the prices and just give themselves much better pricing that they wholesale to the other RSPs. With NBN it would be a marketing decision to take a reduced profit (or lose money) compared to previously where they cheated by charging themselves way below the rate they charged other RSPs.

    • Worse than that.

      They choose where to take the profit. So, Telstra Wholesale makes all the profit, and Telstra Retail makes no profit.

      End result: Telstra makes the same profit on every internet user in the country.

      Instead of making the appropriate profit for the cost of a wholesale service.
      And making an appropriate profit for the cost of a retail service.

      Its simple.

      100 wholesale customers.
      50 of which are bigpond.

      lets pretend they both make 1 dollar in profit.

      Telstra Wholesale get 50 dollars profit from iinet/internode.
      Telstra Wholesale get 50 dollars profit from telstra retail.
      Telstra Retail get 50 dollars profit from End customers.

      Telstra wholesale raise prices by 1 dollar. Retail stays at the current pricing.

      Telstra Wholesale get 100 dollars profit from iinet/internode
      Telstra Wholesale gets 100 dollars profit from Telstra Retail.
      Telstra Retail earns no profit. (profit was eaten by the wholesale cost)

      Telstra income before: 150.
      Telstra income After: 200.

      Chance Telstra retail lost customers: zero.
      Chance competitors lost customers: $1 increase in price = greater than zero.

      With the NBN co, Telstra don’t get to decide where they earn their profits.
      They earn it on the services they provide to customers, just like everyone else.
      NBN co might still raise prices, but at least no service provider will benefit from higher underlying costs. At the moment, higher underlying (wholesale) costs is better for Telstra.

    • not as cheap as exetel at the lowest price point.

      Therefore the NBN is ruining australia and internet isn’t as cheap as it used to be nor will it ever be again tax tax tax that’s all the government does.

      Also Internode is a very long name, it uses more electrons to transmit, therefore I am sure the government will put a tax it. An internet tax if you will. Ohhh wait! the NBN is an internet tax! An internet tax that will cost the government money!

  3. Internode’s NBN plans look very nice. However, compare the NBN plans to their published plans for South Brisbane. They just highlight what a rip from Telstra that Internode (and the other RSPs) are having to deal with in the Velocity-infested South Brisbane Exchange area.

    Example: South Brisbane (100/5Mbps, 100Gb, phone (mandatory)) = $140 ; NBN (100/40Mbps, 300Gb, no phone required) = $95.

    Triple data, intelligent choice of uplink speed, coming support for IPTV and Ops and Maint facilities, all for 67% of the price. Hurry up ACCC!

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