news National broadband provider Internode has confirmed some details of its pricing plans for the South Brisbane exchange area where Telstra is rolling out fibre, claiming higher prices in the region are based on the “crazy” underlying wholesale costs which it said Telstra was charging for other ISPs to access its new infrastructure.
Telstra has chosen to replace the copper connections to about 20,000 premises in the region as its South Brisbane telephone exchange — where the copper cables terminate — is being closed in order to make way for the new Queensland Children’s Hospital in the area. The region is one of the first in Australia to receive fibre services to the home — but is not part of the Federal Government’s flagship National Broadband Network project, although the long-term plan is for the infrastructure to become part of the NBN.
In a post on broadband forum Whirlpool in mid-September, Internode product manager Jim Kellett confirmed the company’s previously outlined South Brisbane fibre pricing plans would remain in force for both new and existing customers in the region.
The plans are significantly more expensive than Internode’s ADSL broadband plans, and feature much more severely limited options. For example, the company’s top-level plan will offer speeds of 100Mbps, but just 100GB of quota, for $109.95 a month (if customers also pay extra for a bundled telephone line) or $119.95 a month without a telephone line. On its own ADSL infrastructure, Internode offers 300GB of quota for $69.95 a month (plus telephone line rental) or $89.95 without a telephone line. And even when it uses Telstra’s ADSL infrastructure, the company still charges lesser prices for 100GB of quota — $69.95 plus telephone line rental, or $89.95 without line rental.
Maximum ADSL quotas through Internode range up to a terabyte per momth.
Fellow ISP TPG also this week released its South Brisbane pricing. Although the ISP’s fibre plans are closer to its ADSL plans on Telstra’s network than Internode’s are, they are still expensive and restricted compared with its own ADSL network. TPG, for example, only offers speeds of up to 30Mbps in South Brisbane, despite the fact the fibre network is capable of speeds up to 100Mbps. It only offers a maximum of 300GB of quota.
In an email interview today, Internode managing director Simon Hackett said his company was planning to offer plans with a higher quota than 100GB at some stage, but was limited by Telstra’s South Brisbane pricing. He said initially, Internode had believed customers wouldn’t sign up for plans with more than 100GB of quota because of the prohibitive pricing, based on Telstra’s model.
“It turns out that some of our customers are prepared to pay whatever it really costs us to go above 100GB, so we are currently looking to add in one or two more, higher quota, plans to the mix there,” he said. “They will be correspondingly more expensive because of the crazy underlying wholesale costs, but we’ll field those plans for those who do want to buy them.”
Hackett said Internode had discovered in its customer base a significant number of customers who were prepared to stay with the ISP, despite the high prices sourced from Telstra, “because they find the whole re-monopolisation of their services across their exchange area, into Telstra-style fibre, to be so offensive to their sensibility that they’re willing (though obviously not happy, at these prices) to stay anyway.”
“We appreciate the support, and if and when the ACCC helps to drive the pricing here to more sane levels, we’ll adjust our retail pricing in a corresponding manner,” he said.
A spokesperson from Telstra’s wholesale division has been invited to respond to the pricing issue.
Hackett said wholesale fibre access in South Brisbane should cost no more than it would on the National Broadband Network, for a bundle of voice and data services and the backhaul needed to service them. “Right now, it costs hugely more than that,” he said.
The wider issue
According to Hackett, it is likely the South Brisbane issue will not be resolved until the ACCC steps in to arbitrate the situation. Internode and iiNet have publicly called for the regulator to intervene in the issue in a recent submission, although it is not clear what approach the Commission will take. It is believed the ACCC currently sees its main priority as working through Telstra’s Structural Separation Undertaking document, which will guide how the telco will deal with others over the next decade until the NBN is fully constructed.
The Internode executive said in practice, the South Brisbane exchange area was “a no man’s land” sitting between regulations and laws intended for the NBN and the copper network situation which pre-dated the NBN.
“The exchange area is being remonopolised by Telstra, in a process which pretty brazen,” said Hackett. “There are wholesale prices that are inadequate, that include temporary rebates for existing customer service costs only (to move the issue out of the spotlight until ‘later’, I guess), and of course the whole thing removes our own access to advanced technology such as IP Multicast as Telstra haven’t invented that yet.” Multicast is used for IPTV services such as the FetchTV platform being used by iiNet and Internode.
“[South Brisbane] is being turned into a large scale Telstra Velocity housing estate, using the same (non-NBN compatible) fibre boxes, that (for instance) include [a] Telstra-retail-only Foxtel RF emulation port, and that are fine for Telstra Retail to offer plans with, because they own the road – but the wholesale access regime being offered by Telstra to replace the forced removal of LSS and ULLS is just a joke,” said Hackett. LSS and ULLS refers to the Telstra wholesale services which are offered over the previous copper network.
“We’ve signed up to it because our only alternative was to have our customers cut off entirely,” the Internode chief added. “Its not much of a choice, really, between ‘way too expensive’ and ‘no service at all’, is it?”