Internode Blog

Internode Plan Changes – July 2011

Tuesday, July 12th, 2011 by

On 12th July 2011, following a careful review of our broadband services, Internode has today released significant revisions to our ADSL2+ broadband plans.

All four of our existing plan tables (Easy Broadband, Easy Bundle, Easy Naked and Easy Reach) have been revised.

The new plan tables are on the Internode web site now.

This document is intended to explain what has changed and why these changes have been made.

Summary of Changes

Easy Broadband, Easy Bundle and Easy Naked plan tables have been simplified, and each now offers just four easy choices for entry-level, mid-range, large, and super-large (terabyte) quota needs.

For all new plan tables, the bundling discount for bundling a fixed-line voice service on the same line as an ADSL2+ plan (where applicable and available) is now $20 per month.

To implement this, in general the bundled plan price is unchanged compared to previous plan tables and the corresponding unbundled price point is now higher than for the previous plan tables.

The new Easy Broadband and Easy Bundle plan tables have had a quota boost of 50GB in the popular mid tier plans (up from 150GB -> 200GB and up from 250GB -> 300GB) at the same bundled price point. Bundled entry level pricing is unchanged.

The revised Easy Naked plan table is now offered as a phone/data bundle of ADSL2+ broadband and an available NodePhone VoIP service (including $10 per month of call credit) at the same quota/price points as the new Easy Bundle plan table.  This aligns the new Easy Naked and Easy Bundle plan tables in terms of both price and effective outcome.

Compared to the old Easy Naked plan tables, the new plan table offers a lower quota at the entry-level price point, but it also includes the bundled NodePhone VoIP service with $10 of included calls. The next plan step in the new table is at a 200GB quota compared to the old entry level 150GB Easy Naked plan.

(Note that the bundled NodePhone VoIP service with a $10 call credit is not available on the old Easy Naked ‘T-Shirt’ plans. To take advantage of this bundle, existing customers are welcome to move to one of the new Easy Naked plans and select the applicable special NodePhone VoIP plan online via My Internode).

The new Internode ‘Easy Reach’ Plans contain significant changes compared to the previous Easy Reach tables:

  • The 200GB ‘Easy Reach’ plan has been removed in favour of new 100GB and 250GB plans. These new plans are at effective price points that are more expensive (on a price-per-quota basis) than the old 200GB plan.
  • Bundling discounts are no longer available outside of ‘Telstra Zone 1’ (Zone 1 includes the most popular 550 exchange service areas nationally).

Two general plan change conditions and charges have now been removed with the new plan release:

  • The previous Easy Reach plan table had a requirement to commit to a minimum 12 month contract term when changing to Easy Reach from another plan. This requirement is no longer present. Customers may change plans online to any new Easy Reach plan with no plan change fee and no change to their existing contract term.
  • The previous ‘T-Shirt’ plan tables had a $29 Plan Downgrade fee when customers moved to a lower price point plan. This fee no longer applies, and plan changes can be made to any new Easy plan table without any plan change fee applicable.

Why Have These Changes Happened?

Since mid 2010, a powerful monopoly service supplier has been engaging in a ‘price squeeze’ that has been described in previous blog posts on this site.

In past price squeezes the ACCC have ultimately acted to remind the wholesaler concerned of their obligations to play nicely, and this has lead to positive and appropriate changes on wholesale access costs.

Unfortunately, for this current price squeeze, no ACCC enforcement action has yet been undertaken and so (not surprisingly) the price squeeze remains in place (indeed, it has in fact become more intense in the last few months).

Meantime, absent of any ACCC activity to encourage appropriate change, our most recent wholesale pricing negotiations have failed to yield any effective improvement in our access costs. In fact our effective wholesale access costs have actually risen in some geographic areas despite movement in the opposite direction in applicable retail pricing conditions.

Accordingly we have reluctantly responded by releasing a new Easy Reach plan table that reflects our true underlying costs in a sustainable manner.

The reason for this is simple – it ultimately advantages nobody if Internode operates at a loss in some monopoly-held geographic areas for an extended period where there is no realistic mid term prospect of infrastructure based competition or of the NBN being deployed in those areas.

We must operate on a financially sustainable basis in the meantime, and we do trust that the wholesale price squeeze currently in place will ultimately be resolved, especially outside of ‘zone 1’.

We understand and expect that in the meantime this will lead to a reduced signup and participation rate for Internode in the geographic areas where an access monopoly on ADSL2+ services exists at present. We don’t enjoy having to make these decisions, however they are the rational decisions to make.

Should the ACCC take appropriate enforcement action that drives improvement in our wholesale access costs then we will be very happy to develop and release appropriate new Easy Reach plans to reflect that improved access cost.

The higher cost for un-bundled versions of ADSL2+ plans in general is a reflection of the realistic underlying costs of these un-bundled plans vs bundled service delivery.

We are at a point in the evolution of the market where various market forces (significantly including the pricing models that are required for participation in the NBN as well as the existing underlying wholesale access models that we use) mean that the new world really is ‘all about bundling’.

Outcome For New Customers

New signups and service relocations ordered from 12th July 2011 will be delivered through the new plan tables.

Where a new connection, relocation or plan change is already in progress, it will be completed and delivered according to the plan that was chosen at the time. 

Outcome For Existing Customers

All existing customer services will remain on their existing plans at this time, unless they elect to move to a new plan.

Please note that Internode is currently considering whether some pricing/plan changes may be necessary for a subset of existing customers who are also outside of their initial contract terms.

When a decision is made on this, specific notification will be provided to any affected customers directly in due course, including an appropriate notice period before any such changes would occur.

The Future

We certainly hope the ACCC do decide to do something about this price squeeze eventually, for the sake of consumer choice, especially in zones 2 and 3.

These services are ultimately to be replaced by (far better) broadband services based on the National Broadband Network (NBN). However the NBN is a ten year project, so it is clearly important that the ACCC does take some action to encourage appropriate market behaviour in monopoly areas in the meantime!