'Unlimited’ broadband dead in the water: iiNet, iPrimus

The two ISPs’ chief execs says unlimited broadband can’t work in the Australian market

iiNet chief executive, Michael Malone, has come out with a definitive statement on the recent emergence of unlimited broadband plans in Australia: they’re unsustainable and can’t work.

Speaking to Computerworld Australia, following the launch of the internet service provider’s one terabyte plan, Malone said unlimited plans, as offered chiefly by Optus and AAPT, were doomed to extinction.

“I’ve looked at the numbers on [AAPT’s unlimited plan] and that it is going. We’ve said publicly that it is going to be gone that day we take over,” Malone said, referencing iiNet’s recent agreement to acquire the consumer division of the New Zealand Telecom owned telco.

“On AAPT’s cost base they lost money [on the unlimited plan]. iiNet’s cost base is a lot less than AAPT’s and they are still drastically loss-making.

Malone claimed a number of AAPT’s unlimited plan users had openly bragged about downloading three to five terabytes per month on ISP community forum, Whirlpool.

“When other [users] say, ‘you’re ruining it for the rest of us’, [the heavy downloaders’] quite correct response is, ‘we’ll, I paid for unlimited, so I’m going to use it,” he said.

Primus Telecom chief executive Ravi Bhatia, echoed Malone saying that the same arguments informed the ISP’s recent decision to offer 1.1TB fixed plans.

“You look at any unlimited plans out there from anyone, they always have so many limits on the unlimited plan, and you laugh at that. It’s a joke,” he said.

“Ok this is an unlimited plan but you must conform to this formula and the moon must be full… and it must be the 14th of December. It’s ridiculous.

What I’m saying is the consumers, they laugh at it, we should come out in the open and say that is what we will deliver. We are dealing with customers and we are not in the business of deceiving our customers people who do that won’t last long. It is wrong."

iiNet’s Malone said the absence of the viability of unlimited broadband plans in Australia, as well as the rest of the world, could be seen when looked at from a simple business perspective.

“If one player in the market offers 100 gigs for $50 and someone else comes out and says they’ll do unlimited. You can’t do it for the same price as you do 100 gigs, so you have to do it for, say, $80. Who is going to go there?” he said.

“A family that is using 10gigs off their 100 gig plan is going to pay an extra $30 to get unlimited? No. The only people who will pay the extra are those who will absolutely cane it. Inevitably that’s what happens.”

Malone claimed the movement by some local ISPs to unlimited plans was an aberration as the global trend was seeing movement from unlimited plans back to capped plans.

“The net neutrality debate in the US, in particular, and in the UK, kind of illustrates the basic problem here,” he said. “You have three parties that can pay for data over the traffic – the network owner, the customer, or the content provider.

“When you have an unlimited download environment the consumer increases their usage then the content owner and network owner bitch at each other over who is going to cover the cost of that. We don’t have that issue in Australia as the cost of incremental traffic is borne by the consumer who gets the most utility from it.”

“If you increase speeds up indefinitely something has to be capped. Look at the NBN now with [NBN Co CEO Mike] Quigley saying they are trialling and getting 1Gbps. Are we really going to offer unlimited downloads on 1GBps connections?”

Malone said the way this challenge was addressed overseas was through speed limiting, rather than download limiting. In contrast, iiNet would look to deliver the highest possible speeds, but limit those with download caps.

“If you look at the underlying costs of operating a network, the part that costs you is the data. The speed at which we can reach your house doesn’t cost us any more. So, ultimately prices should reflect underlying costs.”

With reporting by Chloe Herrick

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More about: AAPT, AAPT, APT, etwork, iiNet, iPrimus, Optus, Primus, Quigley
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Comments

Kevin

1

Malone,

Sorry mate, while I respect your opinion greatly on this you are wrong. Unlimited is coming and neither you nor anyone else is going to stop it. The market drives the demand. Capped plans are unheard of overseas, we are the abberation in this country. To say the data is the cost is just a fallacy. You dont pay for data, you pay for bandwidth and thats all we want as well. The ISP's in this country have been using caps as an artificial mechanisim to reign in costs. Sorry but it's not going to cut it anymore, come up with something else. Fair use policies sound reasonsable to me. It's only the top %2 you are really worried about anyway. If all your customers are using a lot of bandwidth then it says something about the caps system they have now doesnt it?

Kevin

NPSF3000

2

"Capped plans are unheard of overseas, we are the abberation in this country."

Totally incorrect. While most countries offer "unlimited" residential connections, the servers that provide the data most certainty do not.

In this country, people take unlimited plans to the extreme, and as such it is unfeasible to offer them at the prices that makes it available for mass consumption.

While it is possible for unlimited to occur, there is absolutely no guarantee that this will happen.

Kevin

3

I am referring to unlimited residential. I am not running a server and %98 percent of home users would be the same so the statement still applies. You talk to someone overseas about capped data and they go what? They have no understanding of the concept because they have *never heard of it before*.

Kevin

Jim

4

What I find amazing is that I have yet to see any party seriously start talking or debating or even developing strategies around the "applications" that will be fuelling the NBN infrastructure.

It's sort of like wired up and nowhere really to go right now. The Federal Government should start thinking about fuelling a "National Broadband Applications Fund" - Jobs, investments, exports etc...

Hi. Guy

5

Im on tpg unlimited... I do 3-4tb pm ... Is that crazy? ....IT BLOODY SURE IS BUT I LIKR IT

mark

6

All of those commentors who believe unlimited is sustainable should put your money where your mouth is and start your own ISP, selling these plans. You could be the next Michael Malone. What is holding you back? Not actually knowing anything about running an ISP and it's costs maybe?

Pete

7

Unlimited content originating from Australia might be OK, it’s the overseas links that really cost the ISPs.

But people who download that much should be forced to watch or listen to everything they download. Otherwise it's just wasted :-)

Jo

8

Can anyone explain why we have not explored dynamic spectrum management (DSM) before committing massive amounts of money to laying of fibre optic cables?

Kevin

9

"Not actually knowing anything about running an ISP and it's costs maybe?"

Sorry but why dont you since you seem to be an expert? ISP pays x dollars for size of pipe, why cant I pay x dollars for my piece of that. It's a matter of changing the way they think about the service they are delivering. Problem is they have had it too good (quotas) for too long so they can't think any other way. Placing a value per megabyte is firmly entrenched in their minds and *that* is what *has* to change. Deliver the service, the pipe to the user and forget about data usage, just get on a ubiquitous national network (NBN).

Kevin

kevin

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