ADSL2+ competition starts to bite

Stuart Corner
Friday, 12 October 2007 06:34

Your IT - Home IT

The Internet Industry Association's latest quarterly broadband index shows competition starting to bring down the price of ADSL2+ services, to the point that they can offer better value than lower speed services. "This competition is leading to some counter-intuitive pricing. Customers using between 500MB and 2GB of data per month are better off taking a 17Mbps service than any other speed of service except 256kbps," IIA says. "Despite the headline monthly rates, the effect of caps means that many customers should actually be looking to significantly upgrade their service speeds in order to make savings."

The survey has now been undertaken quarterly for a year and Spectrum Value Partners, the market research firm that compiles the report said that, "with one year's data now available we can see that prices have not been falling quickly. For most usage profiles, the best available deal remains broadly the same cost as a year ago. However, what has changed are the speeds available. As high speed broadband competition has increased, so its average price has fallen, meaning that Australians with access to cable or ADSL2+ high speed services can typically now subscribe without paying any more."

Justin Jameson, a partner, in Spectrum Value Partners, said: "The Spectrum/IIA study shows that, as competition begins to bite at the top end of the market, high speed broadband customers are getting a better deal now than they were at the start of the year. In fact, many medium usage customers (say 2GB per month) in competitive exchange areas could switch to a higher speed deal and pay less money overall."

Spectrum analysed some 151 different residential broadband plans from the top four fixed service providers by market share as determined by JP Morgan at December 06 (Telstra, Optus, Primus and iiNet) and from Unwired.

It concluded that, on a total cost of Broadband basis (ie. start up costs plus headline fees plus usage charges), Australians would have been paying between $38.95 (ultra low users at 256kbps) and $85.70 (heavy users at 17Mbps+) per month for their broadband service assuming that they picked the most economical standalone package. Similarly for bundled packages, the range was between $33.90 and $75.66.

Spectrum found that , of the operators surveyed, Primus now offers the most competitively priced 'bundled' ADSL2+ service for all except the heaviest users, displacing iiNet, although on a standalone basis iiNet remains the cheapest

Pricing used in the report was extracted directly from the ISP websites on 28th September 2007. Pricing comparisons are based on four user profiles based on hypothetical usage levels: 'ultra low' (200MB per month), 'low' (500MB per month), 'medium' (2GB per month) and 'high' (10GB per month).