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Prices dive as ISPs take up Telstra broadband challenge

Prices dive as ISPs take up Telstra broadband challenge

The launch of Telstra’s $29.95 broadband products has had a domino effect on prices across the industry, with competing ISPs slashing charges and introducing bare-bone services in a bid to match the cheaper price point.

Telstra announced last week it would begin offering entry-level ADSL and cable plans featuring a 200MB monthly download allowance for $29.95 a month. Excess usage is charged at 15 cents per megabyte.

The telco's decision to drop its ADSL and cable prices follows the launch of Optus’s first ADSL service nationally.

Rival ISPs have decried the $29.95 price point, suggesting the retail price is anti-competitive compared with Telstra’s wholesale pricing structure. Nevertheless, many have, or are now in the process of, introducing lower-priced services to try and compete with the telco.

Primus has taken steps to meet the Telstra BigPond broadband plans with a lower priced ADSL service, announcing a $39.95 entry-level plan through its iPrimus brand. The $39.95 plan is based on a 256Kbps/64Kbps service and features a 100MB monthly download allowance. Users must bundle their Internet and telephony services with Primus in order to be eligible for the $39.95 plan.

iiNet is now also offering a $39.95 ADSL plan to customers who subscribe to both its Bliink Internet and phone services. Customers will be allowed to download up to 3GB of data each month during both on and off-peak times (for a total of 6GB per month) with a connection speed of 256Kbps. Although there are no excess usage charges, clients who exceed their download limit can expect to have their access speed slowed to as low as 33Kbps.

OzEmail announced last Friday it would offer unlimited broadband access across all of its ADSL plans from Tuesday. Prices start from $49.95 per month for its 256Kbps unlimited download service, $64.95 on a 512Kbps service, and $99.95 per month for the 1500Kbps unlimited plan. Users who download more than 12GB of data in any given month may have their access speed slowed, depending on network traffic, OzEmail says.

Pacific Internet has followed suit, reducing the price of its Home DSL 256K/64Kbps plan from 24 February to $44.95 per month based. The service is based on a six-month contract and includes 1GB (up from 500MB) of traffic. Consumers will incur excess download fees.

The ISP is also launching a new Super Off-Peak plan for $49.95 per month that offers speeds of 256/64kbps from 6pm to 8am Monday to Friday and all weekend. Speeds will be slowed to 64/64kbps during business hours. The Super Off-Peak plan includes unlimited downloads.

Western Australian-based ISP, WestNet, also entered the pricewars, launching a new “Lite” 256K/64K ADSL plan for $29.95 with 200MB of downloads. WestNet is offering the cheapest excess rate so far, at 10 cents per megabyte capped at $59.95. Once a customer has hit the $59.95 cap, their access speed is slowed to 72Kbps.

“This is a very exciting time for the industry filled with new growth opportunities," WestNet managing director Peter Brown said. "However, it is also the time for service providers to take on more social responsibility and protect their members.”

The new $29.95 product is for WestNet metropolitan customers only. Those in regional areas will be charged an additional $8 per month, with excess usage capped at $67.90.

Smaller ISP Dart has taken the price cuts even further, introducing a $26.95 ADSL service. The plan includes 200MB of downloads per month and is based on 256Kbps/64Kbps access speeds.

The cheapest plan however has come from Referral.net.au. The ISP has launched a $19.95 ADSL plan incorporating a 200MB monthly download allowance. The Star Trak Lite plan is based on a 12-month contract. According to the ISP’s Web site, excess usage is charged at 15 cents per megabyte, but will be capped at $50 each month.

Referral.net.au owner Michael Alvanos said the ISP will be losing some money on customers who sign up to the $19.95 plan and stick to the 200MB download limit. Referral.net.au will break even once customers hit 400MB a month, he said.

The ISP will be closely monitoring the plans over the next three months, but is hopeful of being able to offer a $19.95 price point in the long-term, Alvanos said.

He added the ISP does not have a marketing budget, and gets most of its business through referrals from existing customers, keeping operating costs lower than some of the larger ISPs.

Referral.net.au has a wholesale ADSL agreement with national network provider Veridas.

Other ISPs said they would institute price cuts across their ADSL plans this week.

Internode managing director, Simon Hackett, said the ISP will cut its ADSL prices by the end of this week.

Netspace is also expected to release new pricing plans in the next few days.

But Swiftel spokesperson, Colin Marland, said its ADSL prices were already competitive and offered a better tariff rate for heavier users compared with Telstra’s. As an example, Marland pointed out Swiftel could offer users a 256Kbps service with a 1GB monthly download allowance for $39 per month, while BigPond users could expect to pay $59.95 a month for a 500MB limit with the same access speed.

Alternatively, BigPond users on the $29.95 plan who downloaded an additional 800MB of data could expect a $159.95 bill, he said.


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