ISP Australian Broadband Services (AusBBS) has released the first pay-as-you-go plan (PAYG) for the National Broadband Network (NBN).
AusBBS CEO Rob Appel said consumers rarely use their full data allowance and end up paying for more than what they need. ISPs bank on this, and if customers used their full cap allowance, ISPs would run at a loss, he said.
A PAYG plan would give customers more flexibility, Appel said.
However, bringing a PAYG NBN plan to the market has not been without its challenges.
“It’s been a challenge to get our suppliers to work with us on a pay-as-you-go model because it’s something that the industry’s not used to. A lot of the wholesale market is built around caps as well,” he told Computerworld Australia.
Computerworld Australia: Which NBN plan is best?
“When we’re introducing pay-as-you-go at the retail end, obviously we need to get our suppliers to work with us on that. That’s probably been one of the biggest challenges. It’ll be interesting to see how the market takes it.”
AusBBS, which has an outsourced business structure as a ‘virtual ISP’, will be running residential trials with around 200 customers on its NBN services to test different aspects of the company’s systems and operations. For example, ensuring its platform is able to process and provision orders efficiently.
“The key part of what we’re doing is just bedding down those systems [and] just making sure things are working smoothly before we go into a high-growth phase next year,” Appel said.
“We’re trialling the systems and the sales process, but [also] the actual services are long-term services, so wherever possible we sign people up to 24-month contracts.”
AusBBS will be targeting the “average” Australian household that uses 25GB to 35GB per month but might be signed up to 50Gb to 500GB plans.
By the end of next year, Appel said he hopes AusBBS will have up to 5000 customers on the NBN.
“It’s subject to lots of variables. Obviously if the NBN hits its targets, that impacts on our ability because of the market size we’re chasing,” he said.
PAYG NBN prices at AusBBS start at $39.95 for 12Mbps, which includes the first GB of usage. Beyond that, customers will be charged 85 cents per GB up to 10GB and 40 cents per GB after on all NBN speeds.
For a household that uses 25GB of data per month, that works out to $53.60 per month. This compares to the bottom tier NBN plan at iiNet for 12Mbps for $49.95 for 40GB of data (20GB on-peak and 20GB off-peak). Meanwhile, discount ISP Exetel offers a 12Mbps plan for $35 per month with a 50GB data allowance.
On higher speeds, a 25Mbps PAYG plan at AusBBS starts at $46.95 with 1GB included and the 100Mbps PAYG plan starts at $59.95. The company does not offer 50Mbps speeds.
The company is also offering capped plans starting from $49.95 per month, with Appel stating the company will encourage customers to move across to PAYG plans if AusBBS believes they are more suited to those types of plans.
AusBBS has been preparing for the NBN for over 12 months, with private sources providing “hundreds of thousands” of dollars in funding to build the initial platform for services and to run a three-month trial, which was scheduled to launch in August this year.
“We’ve applied the funds to setting up the platform for the purposes of the live trial. So really what we’re trying to do is prove that our business model stacks up,” Appel said.
“The funds have been used to establish the initial platform which means the front-end website selling tools, the integration with our billing partner and the various pieces of integration that were required with the suppliers, Nextgen and Vocus. We have a number of other suppliers that we’re in the process of working through [as well].”
The next three years will provide substantial opportunities for the company, Appel said, and while construction of the network not reaching a peak until 2016, he said a large number of premises will still be connected to the NBN in the lead-up to peak construction.
"We see the next three years as a big opportunity for the new entrant that’s executed well,” he said.
“[However], in three year’s time the biggest players will really be coming in from all sorts of different industries … Longer term that’s going to be a challenge for us.”
Follow Stephanie McDonald on Twitter: @stephmcdonald0
Follow Computerworld Australia on Twitter: @ComputerworldAU