news National broadband player iiNet has revealed it will challenge cut-rate ISPs TPG and Dodo with a new $79 broadband and telephone package offering “unlimited” broadband quota and to be marketed under a new brand dubbed “Jiva”.
Historically, iiNet has been situated at the premium end of Australia’s broadband market, with its broadband plans featuring less quota than those of rivals like TPG and Dodo, while also costing significantly more. iiNet has also not previously offered an “Unlimited” quota plan as its cut-rate rivals have, preferring to set discrete quota limits and then rate-limit customers’ broadband connections when they go over those limits.
However, in a media release issued this morning, iiNet unveiled a revamped strategy to deal with what it said was “growing consumer demand for a simple, high-value Internet service”. “Jiva will be ready for new customers from September 2013, selling under the simple proposition: ‘One plan. One bill. Always.’,” the company said. “For $79 per month on a 24-month plan, Jiva customers will get an ADSL2+ broadband connection, unlimited broadband data, all local and national landline calls, and a wireless modem.”
In his company’s statement, iiNet chief executive Michael Malone said the Jiva initiative was designed to attract new customers to the iiNet group who are looking for a simple, all-in-one connection, and didn’t want to compromise on quality.
“It’s really all about value,” Malone said. “Our research is telling us there is a section of the market that wants high-quality broadband that they can just set-and-forget. Jiva is targeting those people – by having one simple product we can streamline human contact and offer a quality connection at a great price.”
Though offering an inexpensive service, Michael said Jiva was definitely not ‘budget’ iiNet. “Jiva is not about cost. It’s about simplicity,” he said. “Over the next 12 months I want Jiva to prove that an innovative, high-quality Internet and phone offering can successfully compete with the low- value offers in the traditional ‘all you can eat’ space.”
Jiva customers will sign up online as part of the brand’s streamlined self-service approach and the company will have its own team of support staff to help out if customers need it. “It’s a simpler product offering, so Jiva customers will need less support and, of course if they need help our staff will be right there for them. Jiva support staff have been selected from within iiNet’s award-winning customer service team and customer interactions will meet the same high service standards we insist on across the business,” Malone said.
The news comes just a year after iiNet chief technology officer John Lindsay published a high-profile article on the company’s blog arguing that the pay as you go quota charging system used by most Australian ISPs was fairer than the ‘unlimited’ quota models popular in regions such as the United States and Europe.
In Australia, the majority of ISPs, including Telstra, Optus, iiNet, Primus, Exetel and others, only offer broadband plans with so-called ‘quotas’. Each pricing tier comes with a certain amount of download quota per month, and customers can increase their quota by moving to a higher tier. Usually the quotas top out at around a terabyte of quota.
However, in the US and Europe, it is popular for ISPs to instead charge customers on a different basis, offering different speed tiers or other features coupled with an ‘unlimited quota’. Some Australian ISPs such as TPG and Dodo do offer such plans locally for a competitive flat rate — and they are highly popular, as they avoid any potential for users’ monthly quota to run out.
Lindsay claimed that if Australia was to switch to an unlimited model for broadband consumption, just 3 percent of users would account for 50 percent of all downloads. “Quotas are designed to be an effective pay-as-you-go system to ensure users only pay for what they use and for most Australian consumers, this is the best business model for the Internet,” he added.
“Operating a quota based business model ensures we’re not responsible for policing activity online – our customers pay a fair price for the services they receive and we can focus on more important issues than where their traffic is coming from. While US providers argue about a two-tier system, our priority is to provide awesome customer service and ensure our customers enjoy a seamless experience online, whatever it is their Internet connection means to them.”
Sorry for dragging up that old article, John ;)
Why is iiNet launching this new single price, unlimited broadband plan, and why is it doing it through a new brand it’s come up with? I think it should be fairly obvious. The company sees a market opportunity at that price point, especially with respect to taking on the TPGs and the Dodos of the world, but it doesn’t want to impact its existing, very successful business by merely launching such services through its iiNet brand. It believes that with a new brand (and, we can assume, a massive associated marketing campaign to launch that brand), it will be able to attract new customers to the iiNet fold — customers who are very likely with one of its competitors right now.
Will the strategy work? Yes, to a certain extent I believe it will. Overall I believe iiNet is right in that there is a large separate audience out there interested in “set and forget” unlimited plans at the price point it is offering, and I believe quite a few customers of cut-rate ISPs such as TPG would find it attractive to migrate to iiNet, if they can get a similar plan at a similar price, from a brand with the technical and customer service strengths of iiNet.
The main issue for iiNet will probably be managing churn from its existing customer base. Speaking as a previous long-time iiNet customer (I recently moved onto Telstra HFC cable), I can say that I personally find iiNet’s ‘Jiva’ offering quite attractive. All your local broadband and most of your telephone calls for $79 a month? That’s pretty decent. iiNet doesn’t offer ‘unlimited’ plans right now. With Jiva it will, and I’m sure quite a few iiNet customers will want to migrate across. iiNet will need to manage this carefully — it wants to attract a new audience here, not cannibalise its old one, migrating them to lower-profit-margin plans.
The one question I have about the Jiva service is to do with customer service and contention ratios/network quality. Cut-rate ISPs like TPG have had notoriously bad customer service in the past, and their customers have, in the past, regularly complained to me about the poor quality of the company’s broadband network, especially during peak periods. Will these same issues apply to iiNet’s ‘Jiva’ brand? If not, it sounds like a great offering. But if they do, then the brand could end up being a millstone around iiNet’s neck. The company won’t want to sacrifice its current good reputation for a bad one. That would be a terrible outcome for the broadband powerhouse.
Image credit: iiNet