Thursday, September 10. 2009The Big Changes In IP Pricing......John Linton ........finally seem to be filtering through to end users other than Exetel's. At least that seems to be the case according to this announcement from AAPT: http://www.itwire.com/content/view/27581/53/ 12 hours unlimited use from 8 pm to 8 am is certainly a really useful innovation in the boring "meeee toooo" Australian ISP marketplace - something that Exetel has been trying to put in place over the past 5 plus years - but has failed to do. I also thought the 8 am to 8 pm period was a real first and it appears to me that AAPT are trying really hard to do something really different - and that may be the case - but as I couldn't find this new offer on their web site I'm not sure about some of the details and the 'base price' of $A89.95 (plus a $A30.00 telephone line rental? plus some bundled call costs?) does seem to be very, very high for a 'family' user. Also 5 gb of 'peak' usage allowance seems out of 'kilter' with a user paying so much for internet usage. Irrespective of how all of those details pan out it is very definitely an innovation in a marketplace not known for anything but slavish copying. Doubtless their parent company's ownership of 50% of Southern Cross has heavily influenced this 'brave' decision but, from what I read, it seems Telecom NZ is using heavy traffic management and a lot of proxying to make their unlimited offers in NZ (including 24 hour unlimited). It's unfortunate that I'm on holidays because Exetel have been looking at new plans that both restore the 12 hour free download period and move it to a different time frame - coincidentally the same as AAPT is now offering - 8 to 8. Our proposed version was 12 hours unlimited BUT no P2P/Rapidshare/Etc from 8 pm to 2 am with heavy P2P constraints in that period but no constraints on P2P in the 2 am to 8 am period.....or something like that. These sorts of considerations have become possible as the price of IP bandwidth continues to fall and the innovations in splitting bandwidth pricing continue to permeate the more conservative of carriers who offer IP services. AAPT seem to be stressing that this is a 'family' oriented plan structure and that makes a lot of sense, except for the price, as if it were to be used by the sort of users who seem to have taken up the earlier version of this type of AAPT plan then it might be some sort of problem, if not for AAPT with their 50% of SX bandwidth, then certainly for companies like Exetel. I would think that a 'family' plan would need to be around $A60.00 a month (plus some cost for a telephone line) with 'unlimited' downloads 24 x 7 - with P2P etc "banned" except for the period 2 am to 8 am each day. I am enthusiastic about providing such plans to 'real' users and see that it is one of the sensible approaches to getting rid of the false premises that have been in place since 2002 due to Telstra's methods of first offering 'broadband'. Since those early days every subsequent ISP who entered the market for providing ADSL services (even now many ISPs use their own back hauls and their own DSLAMs) still slavishly adhere to a charge for the basic service and a separate charge for data downloaded, and in the really sad ISP cases, data uploaded. The only barrier we have seen, and we have seen it consistently for getting on for 6 years, is the growing number of "15 year olds" who use their parent's ADSL to download ludicrous amounts of data. Doubtless these dummies represent less than 5% (probably far less than 5%) of all broad band users in Australia but they are the bane of the industry generally (not just Exetel) and play a large part in offers such as the new AAPT plan in fact having may usage constraints. So while my heart is much closer to thinking in terms of 'unlimited' internet my head remains focussed of the d***head factor that makes such offers very dangerous. I was heartened by AAPT's bravery though as they undoubtedly, via their parent and their previous iteration of 'unlimited plans' have become comfortable that they can control, perhaps even eliminate, the d***head factor in trying to provide a good internet product, simply and at a really good price (well, they haven't done the really good price bit yet but it's only a matter of time). I will be interested in finding ut all of the other details as they become available and also what companies such as TPG do in response over the rest of September and hope that by the time Exetel get around to releasing our version(s) of "unlimited" plans there is some space left for us to 'innovate'. Trackbacks
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I'd assume the $30 line rental is included in that price, given their current offering of $49.95 for 20GB + unlimited 2am-8am off-peak + $29.95 optional phone line rental (with $50 credit), resulting in the plan price likely being $60/month?
If these "12 hour off-peak" plans are only offered in a "5GB" peak size - by nature, the users that do download 750GB off-peak (that's the highest value I've read so far and is quite possible at 13mbps+), would be unable to live with such a small peak quota. As far as I know, AAPT serve a large amount of business customers, one might assume AAPT have considerable spare "after hours" bandwidth as a result. Perhaps they are making some money off their part-owned "PTL" exchanges? The setup/transfer fee of $90 vs $40 for Exetel's Optus plans is quite steep! Also of interest, if a user were to "leech" 100% of the time, the cost per GB of data is equivalent to the Telstra Business Unlimited plan. http://spreadsheets.google.com/pub?key=tTV1KM1hcUPOtFQyf7iVN9w&output=html Exetel fare considerably better in the second spreadsheet page with near the lowest cost per month of any ADSL2+ ISP. Comments (3)
Put a big banner warning user about nasty heavy throttling during the desired hours
d***heads will forever be d***heads Its really great to see you planning to bring back 12 hour off-peak Comment (1)
'Unlimited' is likely just the same as the old unlimited* for the most part. As in,its unlimited for emails, web browsing and a spot of gaming. Low usage plans at a lower cost would suit those peoople well.
Unlimited should be just that. Unlimited. Whilst I share the viewpoint of limiting P2P, several apps (WoW patcher, I think Ubisoft or EA have one that uses P2P protocols as well) use P2P as their base, simply to share the load. In saying that, with caching unlimited could be a very good thing, so long as things like Steam (and the few others out there) are in the unlimited part. Any idea if for anyone not owning large parts of IP sellers it's a good idea profitwise? Comment (1)
Love the sound of your proposed "unlimited" plan, it'll give a lot of really value to most home users.
Just hope you're able to effectively limit people from fluding the network at 8pm. Comment (1)
I'd assume the $30 line rental is included in that price, given their current offering of $49.95 for 20GB + unlimited 2am-8am off-peak + $29.95 optional phone line rental (with $50 credit), resulting in the plan price likely being $60/month?
If these "12 hour off-peak" plans are only offered in a "5GB" peak size - by nature, the users that do download 750GB off-peak (that's the highest value I've read so far and is quite possible at 13mbps+), would be unable to live with such a small peak quota. As far as I know, AAPT serve a large amount of business customers, one might assume AAPT have considerable spare "after hours" bandwidth as a result. Perhaps they are making some money off their part-owned "PTL" exchanges? The setup/transfer fee of $90 vs $40 for Exetel's Optus plans is quite steep! Also of interest, if a user were to "leech" 100% of the time, the cost per GB of data is equivalent to the Telstra Business Unlimited plan. See: spreadsheets.google.com/pub?key=tTV1KM1hcUPOtFQyf7iVN9w&output=html Exetel fare considerably better in the second spreadsheet page with near the lowest cost per month of any ADSL2+ ISP. Comments (3)
I find it curious that you want to offer an Unlimited service but are concerned that "d***heads" may actually have the gall to use it in an unlimited fashion.
60GB is plenty for any normal user. Obviously people attracted to your new Unlimited plan will tend to use more then 60GB and P2P will be their preferred method. I think if you offer an unlimited plan it should have no conditions, otherwise it is an Unlimited* plan and we get into the tired old "abuser" bashing. I like your idea of a few days ago better, low access charge and $1 per GB peak 50 cents off peak. Comment (1)
I read your blog every day and run a small soho IT support business that supports soho-type businesses. My business is therefore both a consumer of the types of services you supply as well as recommenders of such services for our clients. We also get to experience a number of ISPs and telco's that our customers have chosen themselves.
It's interesting and insightful to read your comments on the ISP business from the supply side. I also find your ideas interesting in their deviation from the "me too" that absolutely pervades all areas of supply of goods and services in Aust+NZ. I have been fighting "me too" forever, but it’s hard. There is something about small markets that seems to leave room open for this in our part of the world. A customer really has to look hard to find the small, invisible, unheard-off Exetel-type players who are trying to do something different. Over the years I have studied a lot of ISPs and their plans and come up with a number of criteria to check in choosing ISPs and telco's. Unfortunately, there is massive information asymmetry between suppliers and consumers. The larger suppliers have huge marketing operations which consist of, not to put too fine a point on it, paid professional liars pumping out words about what the company does and how their plans work which have little to do with the reality, although they might squeeze past the corporate legal department if there are enough asterisks and disclaimers in the text. Reality can often only be determined by signing up to a service and experiencing it. Only then do you discover that the offshored customer "service" people are living a different reality from the marketing department and that there is no way of making a reality out of the marketing claims. If signing up to a service means a fixed contractual period and you find the service is no good, then the lies have done their job and the supplier has your money. This must work for the suppliers in large numbers of cases, faced with customers who are too gullible, too uncritical, too unskilled, or too time-poor to look harder or to know better. In this respect I find that Exetel's "no contract” offerings refreshing; customers can try the service and can vote with their feet with little cost to them. This is a more honest way of doing business. In evaluating ISPs and telco's, for businesses like ours and our customers who have heavy-ish data requirements but spread throughout the day and into the evening, I use a number of guidelines: 1. I tend to avoid ISPs who market themselves in a way that appeals to the "unlimited" download crowd. The reality is that we are all ultimately sharing a pipe of limited size and, if large numbers of users are doing antisocial things with their internet connection, then - either the ISP is going to have to have superb contention-management in place to protect the innocent, and most do not (I assume that the cheap ones just don’t care), so you can't generally trust the ISP to protect you; - or everyone is going to suffer variable download speeds. I have noticed through experience with customers that TPG and iPrimus residential and small business download speeds are very variable. With iPrimus it wouldn't surprise me if, the longer a download run, the more they throttle it - I have observed speed constantly declining many times. We use Pacnet, who are primarily a business ISP; their download speed is constant and solidly at the maximum the server can send. With TPG, the download speed just seems random. It appears that minimal management is going on, contention is high, everyone just gets pipe capacity divided by number of users at any instant, and they just don't care. 2. I like plans that have - either a reasonable price for a fixed amount of data, and then shaping (i.e. zero financial penalty) so that there are no surprises. I really hate surprises in the monthly bill, especially the huge surprises that people can experience with "3" data plans where their phones or data cards "roam" to Telstra without their realising it (which can happen anywhere in metro areas if the Telstra cell signal is much stronger than 3’s, not just outside metro as many people assume) and they pay an insane $1,650 per GB (or is it only five hundred dollars per GB now ?) for the privilege; - or a low or zero monthly base fee, and a small per-unit-data or per-unit-time tarif after that so you know you are paying for every GB or every minute and you can minimise your consumption In these terms I like the look of the Exetel HSPA plans - I think it is an honest, simple, and transparent way of doing it. I also like the look of the Exetel "corporate" phone plans with no minimum monthly charge and no contract; I think this is brilliant as a tarif structure. The only reason it’s not an must-do choice is the network's being Vodafone, whose coverage is just not adequate and whose network (voice and data) often seems saturated. Cheap is useless if it doesn't work. For those customers who find it useable, they are fortunate. 3. Regarding peak and off-peak, off-peak is a nice bonus but, if you are going to appeal to anyone other than the "unlimited torrent" squad, then the off-peak has to be provided in hours when it can actually be used, at least a little, by normal human beings. A 2am start time would be of zero value to us and our customers. Pacnet's residential/small business plans have a small off-peak allowance (double the peak allowance, neither particularly generous; nothing they have is unlimited, so they don't get those customers), but it covers a very useful time period, 8pm-8am and has done for several years. We like this. A huge or unlimited off-peak allowance in an impractical time slot is of no value to us nor to our customers. 4. Network reliability is a real issue, and it doesn't seem related to what people pay in residential/small business plans. We have experiences of customers on Telstra Bigpong who have suffered long service outages, in one case several weeks, where Telstra's only response seemed to be to route calls from the 13 support number (based on the origin of the call being identified as from the affected outage exchange) to an answering machine that simply gives a message that says "we know there is a problem and we are working on it" then hangs up and denies the caller the possibility of speaking to a human being. Again we don't say that Pacnet is the only reliable ISP but we and our customers experience no noticeable downtime in a year with them. People forget this reliability and take it as a given, like water coming out of a tap when they turn it on, but, if they get a bad ISP, then they scream. 4. Finally, we tend to watch many suppliers' offerings over time and we watch for danger signs. One danger sign is plans getting less competitive, not better, over time, and also large numbers of plan changes. We really like to know that the ISP/telco has a stable approach to customers. Many are constantly fiddling and forcing customers into arrangements they hadn't bargained for when they did their pre-signup evaluation. One concern we have as potential customer with Exetel is the fiddling around the edge with the plans, like radically changing the off-peak times. Not being customers, we don't know if Exetel customers already on a tarif plan can keep the original conditions or are forced to take the new ones when you change it. That's something we like about Pacnet (whether it is a policy or not we don't know): once on a tarif plan, the customer keeps those rates, terms and conditions for ever if they want until the customer requests a change (at which point they may lose it). Also with Optus Mobile (not that there aren't plenty of things to dislike about Optus), we have a tarif plan that was offered for a short period many years ago and which subsequently evolved into a much-less-favourable animal with most of the interesting benefits excised, but reason of refusing to make any changes we have been able to keep the original plan unchanged (it has all calls including overseas roaming included in the minimum spend - to my knowledge no-one offers this) - this is really appreciable. Keep up the good work with the original thinking. From my point of view you are perhaps thinking too much of how to keep troublesome abusive customers ("unlimited" when the pipes are always going to be limited seems inherently inequitable), but you know your target customer base best. Comment (1)
I'm not "Exetel" but I'll answer anyway regarding your "concern" regarding Exetel plan changes.
1. Exetel have never forced customers onto new plans unless they are uneconomical due to changes made by a supplier (extremely rare) 2. The time changes to peak/offpeak were not plan changes as such, BUT it was also a first for Exetel to reduce "bonuses" - considering the offpeak data had increased numerous times over the past few years 3. Exetel's constant tinkering with plans and costs are usually done whenever supply costs change, Exetel like to pass on savings ASAP but of course also have to pass on costs incurred in a similar timeframe. Swings & roundabouts. An ISP that has had continual growth for over 5yrs, coupled with continual network expansion (unlike some smaller ISPs who grown but don't expand capacity!) is not one you should worry about. Personally I use Exetel's Business plans which offer no peak/offpeak split PLUS included hosting for both website and email at tremendous prices. Having had hosting elsewhere with terrible results (mainly due to running a 26,000+ product shopping cart causing timeouts and page-freezes) I certainly am an extremely happy and loyal Exetel customer. Disclaimer: I also sell Exetel's services, but I exclusively sell xetel because I can (and do) happily recommend Exetel to friends and family. I won't put my name to a service which is overpriced and/or under-serviced. My father had been a happy Exetel customer for 18 months before I started selling them. John - feel free not to post this if you feel I shouldn't be replying. Comment (1)
Peter H, thanks for your reply. It is useful to have input from someone who has experienced the service or supplier. It helps in understanding how Exetel operates over time.
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AAPT's membership in the Group of Four would help them to some degree too I suspect.
They get better access to SX (although Verizon dispute ownership giving anyone an advantage), and their domestic transit is apparently free. Comment (1)
SX sells to all buyers (shareholders or not) at the same tiered price depending on volumes.
Of course Telecom NZ being a 50% shareholder gets 50% of the profits from those transactions. Comment (1)
I am intrigued by the concept for a tired off-peak plans, but from a marketing perspective, doesn't this seem a bit confusing? I suppose if it was opt-in and people knew exactly what they were getting into, then it would make sense, but I'd dread trying to explain to my friends (when recommending Exetel):
You can't use P2P or one-click sites between 8 pm to 2 am, but you can between 2am and 8 am, but the whole 12hr block is considered 'unlimited'. I understand the reasoning behind this, which is to utilise effectively 'free' IP but without disadvantaging other users, but it just seems a bit complicated in theory. Something that I personally think makes more sense: either choose to keep the 60GB off-peak limit between 2am and 12pm, or choose unlimited (everything unlimited) between 2am and 8am. So 6 hours unlimited, no restrictions - or 10 hours with a 60GB cap. I guess the only other problem with 'unlimited' is the sustainability. Even though IP costs are cheaper than ever now, will they still be the same price in 12 months? Does it matter? Maybe it would be a good 'recruitment' drive for new customers, to take advantage of cheap wholesale costs, and reconsider the plans in another year. Interesting thoughts as always, JL Comment (1)
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