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Internode Price Rise: Telstra Squeeze AND Customers Blamed

“Since mid 2010, a powerful monopoly service supplier (i.e. Telstra) has been engaging in a ‘price squeeze’…which is more intense in the last few months.”

Accordingly the Adelaide based ISP has “reluctantly responded” by releasing  revised “plans that reflects our true underlying costs in a sustainable manner,” Hackett wrote on his blog last month. 

The price increases will be to the tune of $10 and up, depending on plans. 

But its not just Telstra that are to blame – users are consuming “unexpected” amounts of data on some plans, it said. The 150GB Easy Naked S plan, in particular, was picked out for excessive data consumption: 

“Typical customer data usage on this plan is far above the level projected when the plan was originally released, and ..well above the average utilisation percentage for other plan types in our customer base” and is being increased by $10 a month. 

What the changes mean is Internode’s ‘unbundled’ ADSL2+ pricing is now higher than before and Easy Broadband and Easy Bundle plan have had a quota boost of 50GB in the ‘popular’ mid tier plans (up from 150 to 200GB and 250 to 300GB respectively). 
The broadband plans affected include Easy Broadband, Bundle, Naked and Reach and will now have four price points: easy, mid, large and super large (terabyte). 

In addition, bundling discounts are also no longer available outside of ‘Telstra Zone 1’ Easy Reach plans.

The 200GB ‘Easy Reach’ plan has also been removed in favour of new 100GB and 250GB plans, which will be pricier than the old data deal. 

“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,” he said. 
However, Hackett has since acknowledged some of its most loyal customers would be hit the hardest by the changes and vowed to change the algorithm by which the calculations were made and will notify customers of the new(er) price revisions.  

“We sincerely regret the (rare) occasion of having to impose a price change for some of our existing customers.” 

“This is not being done lightly, and despite the Internet industry being a bit of an anomaly in the services industries in general (in the sense of it not tending to impose price rises very often, compared to things like power, water and gas bills, for instance), on this occasion these changes are necessary ones,” said an apologetic Hackett.

He said he hopes “the ACCC do decide to do something about this price squeeze eventually, for the sake of consumer choice.”

However, Telstra, as Internode’s wholesale provider, denied its pricing regime has anything to do with the hikes, saying “a range of factors “influenced service providers’ retail pricing” and not just wholesale, reports SMH. 

“We have flexible pricing in place for our DSL customers. We always negotiate commercial competitive terms with our wholesale customers in good faith and we will continue to do so.”

“Having said that, not reducing our prices, i.e. leaving our prices the same, cannot be cause of any increase.”

In its submission to the Australian Competition and Consumer Commission made two weeks ago, David Thodey’s Telstra said it would align wholesale prices to third party providers with the costs it charges to its own retail network.

“For the first time, wholesale ADSL2+ pricing will be directly regulate,” it wrote in the submission. 

So, if this implies equal wholesale pricing for all, it will mean internet provider’s can’t hide behind or blame Telstra for price rises, and that prices will become more directly comparable, so it will be interesting to see how this battle pans out. 

These wholesale arrangements will stick until the NBN comes to light. 

“Should your reaction to receiving a notice be that you decide to change to another provider, we naturally respect that decision and we hope to make you a better offer that may meet with your approval at some point in the future,” a sombre Internode told customers.

“While the majority of our customers are not impacted, unfortunately some of our customers will be (to varying extents, depending on their current plan and their geographic location).”