By JR on Friday, July 22, 2011
This is ridiculous -- when you can ALREADY get wireless plans for half that. The only customers NBN will get will be illegal movie downloaders
HOUSEHOLDS will pay at least $60 -- and up to $190 -- a month for their internet service on the National Broadband Network after Australia's largest privately owned internet service provider unveiled its pricing plan.
Internode -- one of the first internet providers to jump aboard the government's NBN -- has warned that the government's promises to offer consumers prices in line with today's broadband plans would be "untenable in practice".
The first retail pricing for services over the $36 billion NBN were released by Internode yesterday and reveal packages will start at $59.95 a month for a basic 12-megabit-per-second (Mbps) service with a 30-gigabyte quota for downloads and uploads. The plans also include a telephone service with $10 worth of calls a month.
At the top end, Internode said it would charge $189.95 a month for a 100Mbps service with a 1000GB download quota.
Internode blamed the unexpectedly high prices on "existing flaws in the NBN Co wholesale charging model" and warned that regional customers could have to pay more to connect to the network.
The opposition last night seized on the pricing, declaring that it failed to match existing costs for accessing broadband. "The biggest barrier to accessing the internet is not distance or indeed technology but cost," said the opposition's communications spokesman Malcolm Turnbull.
"If the NBN results in higher internet prices, then the outcome of this massive expenditure of taxpayers' money will be to make it harder for Australians already struggling to pay their bills to get online."
But the office of Communications Minister Stephen Conroy last night defended the situation and said it expected competition would bring pricing pressure. "The prices quoted by Internode are comparable with current prices for a bundled internet package which includes telephone line rental," Senator Conroy's spokesman said. "They also provide much higher speeds than are currently available."
Under NBN Co's wholesale pricing model, internet service providers will have to pay an access fee for each customer they connect to the fibre network, as well as a usage fee based on the amount of data carried through the network.
These usage fees angered Internode's managing director, Simon Hackett, who yesterday said the fees were artificially constructed to create a massive financial windfall for the NBN Co. Mr Hackett warned that the usage fees could also result in the abandonment of small-scale retail internet providers in rural and regional Australia.
"It is not a charge based on real costs. Rather, the quantum of this charge has simply been chosen to fill in an otherwise huge hole in the federal government policy requirement that the network return funds to the commonwealth at a commercial rate and in a short timeframe (relative to the expected lifetime of the network)," Mr Hackett wrote in a blog posting yesterday.
Internode said that unless the NBN Co's pricing model were revised then consumer pricing would be "driven far higher than it would otherwise be driven during the first several years of the NBN's build phase".
The Australian Communications Consumer Action Network chief executive Teresa Corbin said that if Mr Hackett's call for changes would result in lower prices, "we would expect the government to look at the relative merit of those suggestions".
"For many customers, the entry-level plans with speeds of 12mbps are much, much faster than what they would be getting now and the prices of these bundles are comparable to what's available today," Ms Corbin said.
Frank Zumbo, a competition and consumer expert at the University of NSW, warned that "if you get the pricing wrong, the whole project comes tumbling down financially".
"There will be differences in pricing at a retail level. It's inevitable given the enormity of the project and given there will be rural and regional and metro areas with different customer profiles," he said. "We fully expect that there will be higher retail prices in regional areas in the same way as unfortunately we have higher petrol prices in rural areas. We need to get the pricing right."
Internode's concerns add weight to a warning by government adviser Greenhill Caliburn earlier this year that said "potential consumer pushback on the usage-based pricing model" was one of the key risks to NBN Co's assumptions on average revenues per user.