Many customers in Australia are concerned about the differences between the traditional broadband plans from companies such as Telstra, Optus and the new NBN network. Since the introduction of the NBN network, the government has attempted to encourage each business and household to use the government regulated network. In fact, the government has solicited the support of mobile broadband companies such as Optus, Internode, iiNet and Vodafone-Hutchinson.
After a definitive agreement was signed in June 2011 between NBN Company and Telstra, a comparison between the companies in the areas where NBN FTTP is installed is no longer necessary. Telstra has agreed not to market their mobile network as an alternative to NBN Network for 20 years. This will give the company time to establish their networks and introduce the concept to customers. Part of the agreement also included Telstra disconnecting customers from their network.
For those customers that have a choice,
NBN network plans are more affordable and faster than most Telstra or Optus contracts. Telstra is offering unlimited mobile broadband connection to their business customers for $280 per month. If the mobile broadband is combined with a fixed phone line, business customers may be able to obtain a discount.
By contrast, NBN offers broadband plans and VoIP in a bundled package with prices ranging from $59.95 and $189.95. Only Exetel and a few other companies have offered prices lower than the NBN network. Exetel prices are currently between $34.50 and $99.50 per month. While this is lower than NBN network plans, many consumers are opting for NBN, because the service is faster and part of a regulated network.
Long Term Evolution (LTE) networks are currently some of the fastest network speeds available. NBN Company purchased Austar for $120 million in 2011 to provide this technology to Western Australia, South Australia, Queensland, New South Wales and the Northern Territory. The purchase will allow NBN to deliver fast broadband plans to each of their areas and build up its fixed wireless network. NBN Company has also signed a 12 month contract with Ericsson to build up the network. If NBN Company decides to continue the project for 10 years, the project will cost a total of $1.1 billion.
Since NBN Company plans to connect 93% of the Australian population to the new FTTP technology, most of the private Internet service provider (ISP) companies who cannot afford to offer the mandatory 120 points of interconnect (POI) will lose their ability to compete. The remaining seven percent of the population will be serviced by broadband related technologies. The setup and running costs will be too high for many of the small companies to afford.
This is especially true in rural areas. The standards to compete in those areas are high. There will be less competition, because companies have to invest more money to offer services in the area. In rural areas, ISPs receive less return on their investment. Companies are required to invest more money into rural areas to build the infrastructure. Companies typically do not charge more for the service and thus, they do not yield the same return as they would in heavily populated areas.
With NBN, telecommunications wholesalers will be able to obtain the service for $24 per month after the mobile services overhaul. Most of the smaller companies cannot offer services for this amount. Telstra is the only known company that can compete, and they have signed an agreement stating they would not. The large POI will create a smaller number of larger players to control the industry.
The outlook for smaller traditional
broadband plans does not look favorable compared to the government-sanctioned NBN network plans. Options for consumers will dwindle, but the service will improve. This may be both good and bad for consumers.
