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For Australian small biz, NBN retail prices look fabulous

Lower cost, higher upload speeds: what’s to complain about?

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When Internode announced tariffs for its National Broadbad Network (NBN) services last week, it triggered an outbreak of mass stenography among Australian journalists. Rather than try to understand the pricing for themselves, they opened the microphones and let practically anybody draw practically any conclusion about the tariff sheet without challenge.

The conclusions were unsurprising: since the top service (100 Mbps down, 40 Mbps up) is nearly $190 per month, whacking the government for “expensive” NBN services is a no-brainer.

Until the cheap-and-cheerful Dodo chimed in a couple of days later, nobody was prepared to admit that Internode isn’t the only retail ISP out there, nor that Internode’s proud market positioning is as a premium service provider.

And nobody, but nobody, was going to try and work out what a similar service might cost in Australia today, away from the NBN.

For a start, you can forget consumer plans. Telstra Velocity, for example – the service that’s offered over fibre for that small handful of customers living in greenfields fibre-serviced developments – doesn’t offer 40 Mbps uploads, but 5 Mbps.

On Telstra’s HFC cable network, a 100 Mbps download service only offers 2 Mbps uploads. Optus’ cable is a little slower (75 / 1.5 Mbps), and where it has fibre, TransACT offers 100 / 20 Mbps services.

As for fibre-based business services: their prices generally aren’t published.

The best I can manage is to look at the price of a heavy-duty business service today, and make the comparison while admitting its shortcomings. Since Internode was the ISP that caused all the noise, what does its price sheet tell me about business services?

The only price it publishes for Ethernet services is down at the entry level – a 10/10 Mbps symmetrical Ethernet service. With unlimited Internet access, that service costs $2,000 per month. That's more than ten times the top-rank NBN fibre-based service.

Of course, a business service is vastly different to a consumer service. That’s why business services cost so much – but it’s also the reason that so many SMEs muddle through running their offices on consumer-grade ADSL or ADSL2+ products. For many SMEs, the difference between a $100-per-month high-spec consumer service and a $2,000 per month business service is too great.

By this measure, Internode’s NBN prices offer a huge opportunity to small businesses. If eventually replicated nation-wide, they will hugely expand the number of SMEs able to afford high-speed services.

Nit-pickers will point out that the NBN service is merely a consumer service at higher speed; it will still suffer contention at some point in the network (true), that contention will be higher than a $2,000 per month business service (also true), the consumer service will probably have lower service guarantees than the expensive business service (no argument there), and so on.

But that’s irrelevant: if the SME can’t afford today’s $2,000-per-month high speed service, then the SME is not enjoying the low contention, more-reliable, better-supported business service. Most of them are buying a consumer-grade service and getting along as best they can.

At $189.95 for a 100 / 40 Mbps service with 1 TB downloads, Internode’s NBN prices look like an absolutely fabulous deal for the small business lucky enough to be in the footprint. But in the world of the-stupid-it-burns media commentary surrounding the NBN, the productivity and cost benefits to SMEs have been completely ignored. ®

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