Internode, a national broadband provider, says it's prepared to take a loss on its new entry-level ADSL plans to keep their customers from "jumping into Telstra's lap".
A spokesperson for Internode says the company is striving to keep the broadband landscape in Australia competitive, even if it means losing money on their ADSL deals.
The company's new entry-level personal broadband plans are offered at the same price as Telstra's AU$29.95 equivalent, however, the Internode deal allows a download limit of 300MB; 50 percent higher than BigPond's allocation.
Internode has also capped its additional download charges, setting a maximum excess fee of AU$30 per month, without requiring long-term contractual agreements from its customers.
Simon Hackett, managing director of Internode, says the company has "redesigned" its broadband plans to make them more "customer-friendly".
"Internode has capped excess charges at $30 a month. That means the customer does not receive any nasty surprises. We also don't have any contract lock-in period, so our customers are free to change their broadband plans if they find another plan suits them better", said Hackett.
TPG have also launched a new entry-level ADSL plan to challenge Telstra's $29.95 broadband deal.
Although matching BigPond in download allowance (200MB) and per byte excess (AU15 cents) the TPG plan is offered for a monthly fee of AU$19.95, with the excess download fee capped at AU$40.
Veteran telecommunications analyst, Paul Budde, says companies like Internode and TPG are taking the "smart option" in the competitive broadband market by capping excess fee's, as he says monthly prices are no longer the key issue.
"If you try to compete with Telstra by being cheaper it won't work, so you have to try and outfox them," said Budde.
According to Budde, price capping is exactly what customers want, as there is still much uncertainty about extra fees with uncapped download excess plans.
"This way the bill is according to the customer's conditions, with Telstra it's not clear, they're all over with their pricing," said Budde, adding "These companies [Internode and TPG] are cleverly exploiting this situation."
Budde predicts the broadband price war will bring great benefits for the consumers and entice many more users onto the broadband circuit.