Telstra's launch of a new broadband service offering up to 20 megabits per second has failed to shake Western Australia's ISP market, with the biggest local player claiming the move is good for the market.
Telstra's launch of a new broadband service offering up to 20 megabits per second has failed to shake Western Australia's ISP market, with the biggest local player claiming the move is good for the market.
Perth-based internet service provider iiNet Ltd welcomed a move by Telstra into the asymmetric digital subscriber line 2+ (ADSL 2+) broadband market, saying it was a "good thing" for the industry.
iiNet chief technology officer Greg Bader told WA Business News that, while his company did not have the scale of Telstra's, the increased volume of customers Telstra's move would bring a whole new range of customers to the market.
The news was also welcomed by Westnet managing director Peter Brown, who said it was " great news for broadband users in Australia".
Telstra said its BigPond high speed broadband would deliver network speeds of either up to eight megabits per second or up to 20Mbps from exchanges offering ADSL2+ services.
"Because of regulatory constraints, the up to 20Mbps service would be limited to exchanges where competitors are also offering those higher speeds," BigPond's group managing director Justin Milne said.
Telstra has limited the offer to certain areas, despite the Australian Competition and Consumer Commission chairman Graeme Samuel saying two weeks ago that there was currently no need for Telstra to provide wholesale access to its next-generation ADSL2+ network.
For her part, Communications Minister Helen Coonan said the government supported any moves to deliver Australians faster broadband speeds, but labelled the decision not to introduce the service outside of competitive areas "disappointing".
Telstra's defiant move today had analysts scratching their heads.
Technology research company Gartner said Australia had finally entered the 21st century.
"Finally we will get something that is really broadband - most people around the world would say that broadband doesn't really start until you get 1.5 mbps," said Gartner research director Robin Simpson.
"What this means, however, is that Telstra is not expanding to exchanges where there isn't any competitors because if they did that, they would have to offer it to anyone else through the wholesale agreement."
Telco analyst Paul Budde said it was a clear indication from Telstra.
"I'm disappointed they limited to exchanges where there is competition," Mr Budde said.
"It shows that Telstra has absolutely no interest whatsoever in wholesale."
Telstra said the new service provides better quality video streaming, lightning-quick web surfing and the ability to send and receive large files quickly and conveniently.
For example, the movie Casablanca could be downloaded in about 10 minutes, compared to a number of hours previously, the company said.
According to analysts, companies like iiNet, along with Powertel, Internode, Optus and Primus Telecom are already selling residential ADSL2+ to consumers and most are at more attractive prices than Telstra's new offer.
Goldman Sachs JB Were analyst Christian Guerra said the deal was "more expensive than the competition" but it would likely grow market share anyway.
"We believe BigPond will continue taking market share from around 40 per cent currently to 50 per cent by 2010/11," he said.
Mr Budde said the new network would "change the landscape" of broadband in Australia, despite the pricing.
"The prices may put a lot of people off, but I estimate that there are more than one million people who are ready to move into ADSL2+ in Australian now, so there's pent up demand for that service," he said.
Prices start at around $59.95 per month and go to up to $149.95 per month for the fast-speed broadband.
Telstra shares gained one cent to $3.92.
Below is a consumer warning from the WA Internet Association:
The WA Internet Association has made a public warning to parents to read the fine print in Telstra's new high speed ADSL pricing plans.
"Parents, be careful! You could be charged excess usage fees of thousands of dollars every month for what is becoming just 'normal' use of the Internet," Richard Keeves, President of the Western Australian Internet Association said today.
Telstra have released a new high speed ADSL plan for $59.95 which includes a monthly data usage allowance of 600Mb at download speeds of up to 8,000kbps. Telstra claim that about 70% of customers on the 8,000 kbps service can access speeds around 6,000 kbps or more. Plans at even higher speed plans are also being offered.
Mr Keeves says that at even at the download speed of 6,000 kbps, the data usage allowed in the plan for one month could occur in less than 15 minutes.
"After that, you will be paying 15 cents for every Megabyte of data downloaded from the Internet. Every minute could cost you $6.59. That's almost $400 per hour."
"With many Internet users accessing video and rich content from sites such as You Tube, it is easy to download large files. High speed internet makes it quick and easy. But quick and easy can be expensive."
"Parents need to understand what the plan offered by an Internet Service Provider is giving you, and more importantly understand what will happen if you and your family go over the limits of the plan. Try to understand the technical jargon used in the plans. Look for value and don't be fooled just because it is an apparently 'cheaper' plan being offered by Telstra!"
