Pot, meet kettle. Kettle, pot.

Pot, meet kettle. Kettle, pot.

Summary: I'm sure we've all written e-mails, or other things online, that have come back to bite us.With its pointless and, frankly, bizarre hate campaign against the government, Telstra in particular must have been suffering post-email regret.


I'm sure we've all written e-mails, or other things online, that have come back to bite us.

With its pointless and, frankly, bizarre hate campaign against the government, Telstra in particular must have been suffering post-email regret.

Then there is Telstra's downright nasty campaign against the Australian Competition and Consumer Commission -- a body set up to ensure a fair competitive environment for Australians -- and the sheer embarrassment of a senior government minister having to step in to warn the carrier off of the independent regulator.

Telstra thinks nothing of making a spectacle of itself in its fights over broadband pricing. Rivals claim Telstra is keeping the price of broadband artificially high (it wouldn't be the first time), and many welcomed last week's lodgement of a special access undertaking to build an open, nationwide broadband network as a Martin Luther-esque act of defiance.

Dropping the hymnal
G9, the group that nailed their proverbial doctrine on the government's proverbial door, is dominated by Telstra archrival Optus, as well as smaller carriers like AAPT, iiNet, and others. Like modern-day musketeers, the nine carriers have united in an all-for-one-one-for-all attack on Telstra.

One can only wonder, then, what the eight G9 members who are not Internode Systems think about the company's decision to raise its broadband prices less than a week after the group lodged its long-awaited plan to deliver cheaper, fairer broadband to all Australians.

In a dramatic restructuring of its broadband plans that Internode euphemistically describes as "updat[ing] plans to meet [a] maturing market", the company has blamed YouTube and BitTorrent for increasing traffic volumes that have pushed up its costs. To compensate, 13 new broadband plans will see many broadband customers paying up to AU$40 more per month.

Internode does have a point, but its timing simply couldn't have been worse.

Here, we have significant rate increases by a company that has continually toed the G9 line by portraying Telstra as a money-hungry monopolist. Just last month, Internode issued a press release entitled "Internode warns Telstra profit will choke broadband" -- and in the release, Internode managing director Simon Hackett is quoted as saying:

If Telstra receives the green light to establish an FTTN monopoly, then prices for high-speed broadband will increase dramatically, which will throttle the adoption of broadband in this country. ... Higher prices suit Telstra and feed it high profit margins, but they will savage competition and undermine the viability of alternative broadband providers. ... If the Australian Government allows Telstra to build its FTTN network with high access costs to its wholesale customer, the cost for the Australian consumer will be higher prices and reduced innovation.

Now we find higher prices not from Telstra, but from Internode itself. This is the same company that recently trumpeted its achievement in passing the 100,000 customer mark, becoming South Australia's first Internet company to pass AU$100m in revenues, and opened a brand-new AU$3m datacentre in Adelaide's CBD to accommodate its dizzying growth.

To say Internode is suffering financially seems to be a stretch, and the company's decision to raise rates now will work against everything it and the rest of the G9 have fought so hard to achieve. No matter how loudly Internode cries "YouTube", irritated customers will see this unilateral increase as a profit-grabbing measure little better than the acts that Internode accuses Telstra of perpetuating.

Internode, after long claiming an unrestrained Telstra will push price rises through the roof, has jumped the gun and put them there of its own accord. One has to hope the other G9 members won't follow suit, or the whole house of cards could quickly tumble under the sheer weight of customer disgust.

What do you think? Has Internode turned the G9 into hypocrites? Are current broadband plans actually too cheap after all? Drop me a line at edit@zdnet.com.au.

Topics: Broadband, Telcos, Telstra, NBN


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Did you actually talk to Simon?

    Did you actually talk to Simon Hackett? If you'd bothered, you'd discover he's _not_ blaming YouTube and Bit Torrent. That might make sense if Australia had unlimited bandwidth plans like they do in the rest of the world, but in Australia we pay for an allocation of download bandwidth. So you get what you pay for.
  • Did you actually read the FAQ?

    In response to why the changes have occurred, Internode's FAQ on the price rises states:

    "The combination of this rising network cost, and the increasing average network resource consumption driven by higher line-speed plans in our customer base has generated a 'double whammy'."

    In amongst the techno-babble, you may be able to decipher that "increasing average network resource consumption" actually means customers using a higher percentage of their quota.

    So basically, Internode are blaming their customers for downloading what they've rightfully paid for. That's not the way to make your customers feel warm and fuzzy inside.
  • And I Quote..

    Defending the changes, Internode managing director Simon Hackett said they were necessary "in order to maintain commercially viable services to all customers."

    "Since our last major plan changes, we have seen a boom in data-intensive online services such as BitTorrent and YouTube. At the same time, the cost of delivering IP traffic has ceased to decline. We're making these changes to ensure a fairer service for all Internode customers as usage patterns become clearer in the maturing broadband market."

    Seems like he's pointing the finger at Youtube and Bit Torrent to me..
  • take into consideration

    You forget to add:

    Most of the rest of the G9 has already raised prices to similar levels. Internode held out much longer before forcing these nessecary adjustments on customers

    Telstra is still far and away more expensive than any of the G9 members
  • ...

    The term "such as" implies that what follows is an example. He's not pointing the finger @ BitTorrent or YouTube specifically but rather, using the two extremely popular services as an example to show that data intensive services, like those, are on the up and up.

    When you read title's like "Internode blame BitTorrent & YouTube" as I have seen so far. It's called sensationalism and it's designed to rope you and attempt to put you on the side of the editor, much like this article seems to do with it's title. I didn't have to read any more then the title and see the words "G9" to know what bias this article was going to take.

    Also, I think this just confirms what the G9 have been saying all along. I'd also like to note that, internode only lowered their prices 6 months ago and they have basically been put back up to what they were before the price drop 6 months ago, with a few exceptions. For example, 6 months ago my plan went down $10 it's now back up $10. Since I have been a customer longer then this 6month period it's not going to make a rats ass of a difference to me and I will continue to use Internode as my ISP.

    Also, someone above said they (internode) are blaming customers for downloading what they have rightfully paid for. Which is well and good, But this is a pretty narrow minded look at things. If you consider that every ISP has a contention ratio of, lets say 20/1(which is a fairly decent one, I have seen much worse) which means if you have a 1.5Mb service you share a 1.5Mb pipe with 20 other people. It's the way things work. Now if all of a sudden everybody starts maxing out their connections all the time, QoS is going to drop, so what the ISP have to do to meet demand and keep up their QoS is lower the Contention Ratio's which in turn means 'buying more bandwidth', which of course, costs more. Now you can argue that they shouldn't be providing a service they can't provide. But your missing the fact that every ISP does this and it's the only way to viably distribute Broadband in Australia. And in the end, it all comes back to how much it costs to buy bandwidth in Aust.

    This is also why I believe Internodes reasoning are fairly good ones. BecauseI for one would hate to have my BitTorrent & p2p services throttled and I do hope it won't come to that. However if our broadband situation in Aust. doesn't improve I fear it will.
  • Telstra DSLAMS?

    What you fail to mention is the majority of the prices that have gone up have been those on the Telstra DSLAMS.

  • doing the dirty

    internode have done a triple dirty, 1. they lowered prices and didn't notify customers, 2. they introduced unsustainable plans and 3. the raised prices when the goose was cooked.
  • Incorrect

    1. They lowered prices and notified all customers through all normal means - direct customer email, notes on customer bills, web site information. Hardly a secret.

    2. they introduced plans including 8Mb/s plans and begain measuring the results, and observed a massive shift in the usage pattern of their customers as a result of those plans entering the frame and begain analysing what would be required to ensure the plans remained sustiainable given that large shift in underlying usage patterns, combined with a plateau in the decent of the cost of the underlying international capacity.

    3. Raised prices after some months of analysis and planning to ensure that this, the first upward movement in Internode pricing in the more than a decade of operations as an ISP in Australia would not need to be repeated

    4. Carefully explained the reasoning behind what happened to customers in extensive customer communications and extensive addressing of customer concerns both indirectly and directly.

    Perhaps the most relevant single explanation of the underlying drivers here may be read at this Whirlpool posting:


    Simon Hackett
  • drawing a long bow


    I feel you are drawing some very long bows with your article. Perhaps you could contact me directly if you'd care to engage in a conversation about what you claim I think, rather than guessing about it.

    In terms of what 'G9 members who are not Internode' think about the price rises that Internode is implementing, I suspect the general answer is 'Why did it take you so long?'.

    If you can look past your first impressions and compare the new pricing to the pricing charged by other members of the G9 at retail, you'll see that the Internode pricing has simply caught up with rises in real underlying cost of doing business in Australia in this realm - reflecting changes already undertaken by pretty much everyone else months ago.

    So you are lambasting Internode for raising prices *last*, not *first*, David. Hardly a hanging crime, and hardly likely to knock the earth out of its orbit.

    In terms of the relativity between the prices charged by G9 members at retail today and FTTN - which must be of interest to you since you've framed this as a G9 commentary at all - the thing to appreciate is that the pricing offered at retail by Internode and every other G9 member is higher on Telstra based service ports than on ports built with non-Telstra infrastructure.

    This directly mirrors the price difference between the wholesale proposition of the G9 for FTTN and the Telstra proposition for FTTN.

    In other words, a Telstra FTTN will remove all non-Telstra based paths from the market, and mean that every customer currently enjoying a better value-for-money and a better speed-for-money proposition on a non-Telstra ADSL2 service will *lose* that service - will suffer an increase in costs and a decrease in utility - if we wind up in a world in which FTTN is constructed on the basis Telstra appears to have in mind.

    To make this more explicit: A Telstra FTTN is designed to involve the physical and forced disconnection (with 12 weeks notice only) of competitors' ADSL2 hardware from the network.

    So a Telstra FTTN will raise consumer pricing for all consumers not currently connected to ADSL via a Telstra ADSL service.

    And Telstra remain silent on the cost impact for customers at a retail level in general in their FTTN world. Silent for an obvious reason.

    So - about the only things that tie the Internode price change to the G9, in real terms, is that

    a) Internode held out the longest before changing its pricing to reflect the new market realities in terms of underlying cost. We did this last, not first. Most of our industry peers raised prices for essentially the same reasons, months ago - and yet you didn't write about them in the same terms at the time.

    b) The retail pricing framework and the sharp difference between non-Telstra ADSL2 service pricing (including from Internode) and Telstra wholesale based pricing continues to illustrate the costs of Telstra FTTN - overall consumer retail pricing will rise, for existing customers to continue to receive exactly the same thing as they do today.

    There are far deeper issues in the G9/Telstra FTTN debate here - these being the issues around the retail cost impacts of Telstra FTTN (clearly, upward), and the extent to which the Telstra media rhetoric acts as a smokescreen over their own failure to address blackspots in the existing metro network - the network they designed, they operate, and they own - as they love to point out.

    To explain the framework in which I feel the FTTN debate *should* be couched, I'd suggest those interested might care to have a read of this short bog entry:


    I'll leave it there, and hope that at least some of your readers take the time to look at the issues here at a higher level than the manner in which you've chosen to do so.

    Others who may have further thoughts they'd like to share with me, or questions they'd like to ask, are welcome to ask me directly via e
  • A sign of things to come?

    Surely these price rises are indicative of what would happen under a Telstra-monopoly FTTN regime.

    Internode & other G9 ISP's costs are largely based on Telstra's DSLAM port charges &/or backhaul. If you don't understand the implications of giving Telstra a monolpoly over FTTN then no wonder our politicians & the public are being hoodwinked.
  • Internode DSLAM $30 cheaper than Telstra DSLAM

    On Internode plans, it costs $30 more for a Telstra provided 8mb/384kb connection when compared with Internode to provide a 24mb/1mb connection. Same data but three times as fast for $30 less :-).

    This is supported by iiNet half year road show suggests that iiNet connections cost half of the Telstra wholesale cost.
    See page 6 of this pdf slideshow:

    Telstra's FTTN will push broadband out of the reach of the average Australian. Multiply $30 x 12 x number of broadband connections = cost Australia's economy = reduced competitiveness. Think about it $360 million a year for every 1 million broadband users will be put back into the economy by the G9.
  • It's an issue of perception

    My goodness -- great to see so many opinions being shared. I have just dropped by to see if my piece had spurred any debate at all, and was pleased to see a mountain of feedback. This is what it's all about.

    Now, if I may respond to several of the comments here, in no particular order.

    1) We all know BitTorrent and YouTube are substantially responsible for the changing usage patterns on Australian broadband. There is no way that having thousands of customers downloading hundreds of megabytes at a time could have any other effect.

    2) I was not writing this column months ago, but had I been doing it I would also have commented on the other providers' price rises, as Renai did in postings such as http://www.zdnet.com.au/news/communications/soa/Netspace-cuts-Tassie-broadband-plans/0,130061791,339273235,00.htm.

    3) As I said in the blog piece, Internode is more than entitled to raise its prices. Nobody expects them to sell uncommercial services.

    4) The gist of the piece was simply that it will appear to many people to be strangely hypocritical to (a) one week, participate in a major network construction proposal designed on the premise that current services are simply too expensive and then (b) the next week, raise the prices of those current services.

    People have very short vision and your ordinary punter doesn't give a toss about FTTN and Telstra and who is responsible for what. What your ordinary punter is going to see from this is "those buggers are claiming Telstra is too expensive, but what did they do -- they just went and raised their prices too. So maybe Telstra is right after all."

    5) The logical conclusion from all this is that maybe Telstra *is* right after all -- that it is simply untenable to deliver high-speed, low-cost broadband to the Australian market. Now we all know this would certainly be easier if Telstra were to play nice and focus on actually innovating in the market, but we also know that is unlikely to happen -- and that its vitriolic and unproductive approach to this whole mess is not going to change.

    In the meantime, rival ISPs have had to play the risk game and develop higher-GB limits that are calculated against the likelihood of people actually reaching those limits. With downloading habits changing dramatically, those calculations just don't work like they used to. This is fundamentally difficult for everyone.

    Ultimately, the finger of blame should be not on Telstra but on the government, which could have fixed this on any number of occasions in the past but was itself too short-sighted to do the right thing for Australian telecoms. Now, smaller companies like Internode are left to pick up the pieces in a commercially difficult and monopoly-dominated market.

    I am not down on the G9 at all -- it is a great effort and I certainly look forward to seeing its success in some way or another -- but it's important that they be seen to be singing from the same hymnal if they are going to sway the (general) public's opinion.

    If Internode had to raise its prices, it would have been better that this happened *before* the G9 proposal was lodged -- then it would have been in the same boat as the other providers that have raised their prices, and all could have vilified Telstra as the reason. This was the point of my piece -- to hope that unfortunate timing doesn't compromise the unified front that the G9 needs to truly change things.
  • Price rises

    The price rises are bad enough however it gets worse.Wait until the shaping clause kicks in.Then after 3 gig is downloaded are they going to make us purchase data blocks?If so,this is completely against everything they have always said they would do.
    Blaming the customers for using their quotas is a cowards way out and stinks of a holier than thou attitude.They completely messed up their planning after the release of 8mbt plans,ones which they delayed to get the balance right!
    Add to that a surchage on credit cards,withdrawl of calling cards,usenet server,some game servers,the list goes on.
    A pathetic looking company,one whose MD used to criticise oyher isp s for doing the same thing.They are becoming a new Telstra.
  • and also this

    According to your employee Mark Newton your customers are generally dishonest and this is the main driver behind the price increases.

    Great PR, digging at your own loyal customer base in a public forum:


    Also curious this happened in the new financial year, signalling a shift in financial and demographic modelling toward higher margin customers, many of which were actually referred by the very 'enthusiast' user base that Internode is now deliberately shaking out. Internode never needed to advertise, because they had us 'fanbois', a now shrinking population.
  • that old chestnut

    Riiiiiight *rolls eyes*

    You pay for a quota which is to be delivered at an agreed speed. *After* that, you get shaped to 64 or 128kb/s depending on your plan. If you are using MORE than 3GB over your allocated Quota YOU ARE CLEARLY on the WRONG plan for your usage habits.

    Internode could, by rights stop, your connection as soon as you hit your allocated quota. You make it sound like they are FORCING you to keep downloading.

    You want more data after your Quota? Then PAY for it. It's simple really.
  • re: take into consideration

    Ahh, so what you mean is Internode managed to break its 100K user mark by cannibilising the users from those ISPs who raised their prices.

    Then, once Internode got all the users it thinks it could reasonably get to churn away from the higher priced ISPs to Internode, it then raised its prices to be inline with those other ISPs? This would result in many of those users who churned to the 'cheaper' ISP, Internode, staying with them as the price is about the same, but they'll incur a churn fee if they move back to their original or another similiar priced ISP.
  • Telstra vs Agile DSLAM costs

    "4) The gist of the piece was simply that it will appear to many people to be strangely hypocritical to (a) one week, participate in a major network construction proposal designed on the premise that current services are simply too expensive and then (b) the next week, raise the prices of those current services."

    As Simon and others have said - the price rises mainly affected those on Telstra DSLAMs. Doesn't this demonstrate, rather than contradict, why a FTTN network would be better if it was NOT in Telstra's hands?
  • At least he uses a name when retorting

    Simon may very well just troll the internet, but at least he doesn't hide behind 'Anonymous' when retorting on the Internet. So much easier to have a go at someone when you can not see or hear them.