AAPT moves first

The puzzle with usage caps on Australian broadband has been that it seems divorced from any real cost incurred today and no one had decided to offer them. I had suspected an adverse selection issue whereby the small percent of very high users would migrate to the first mover causing them disproportionately large costs.

AAPT have announced that they will move first. A two-year $100 per month plan on ADSL2+. I can only wish them well but I think one constraint they face is that Australian usage is likely to be higher because our Cable Television options are much poorer. That means TV and likely movie downloads taking up lots of bandwidth. Nonetheless, for those who worry about their monthly usage, I can tell you that not having to worry at all really is worth some extra dollars per month. (And if you are on Telstra BigPond Cable, I think it is well worth saving an extra few dollars per month!)

4 thoughts on “AAPT moves first”

  1. Will try and write a proper post on this in the next day or so (once my posting issues at catallaxy are fixed).  On the adverse selection issue, my initial feel is that they may not be as impacted as strongly by it as previous attempts at introducing unlimited due to the range of large allowance plans already in market.
    If we assume the price of the broadband plan to be around $70 (allowing $30 for line rental), then consumers already have a fair choice of providers with large quotas. e,.g.
    1.  $49.95 TPG 120GB (60/60) with shaping to 512k once quota is reached.  So a user can save $20 over AAPT and  does not experience a complete crippling of their service once their quota is reached.
    2. $49.95 Primus 130GB (65/65) 64k shaping once quota is reached.
    3.  $50 Exetel 130GB (60/70) $0.50/GB excess
    I think the availability of these plans in market at lower price points might help mitigate some of the adverse selection problem as compared to previous attemptsby providers to offer unlimited.
     
    Disclaimer & Disclosure: I work in the telco sector for an AAPT competitor.

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  2. What I want to know is why Australian hotels have such outrageously high internet fees (and they’re mostly pretty much the same price). By contrast, Adelaide airport has free (but slow) internet, though not many places to plug a laptop in.

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  3. David Stern: Hotels have outrageously high internet fees for the same reason that they have outrageously high charges for: telephone calls; tiny bottles of booze; dubious room service breakfasts; drycleaning; massages; in-room movies; and every other “value-added” good or service they sell.
    It’s because the small proportion of guests that use these services tend to be business travellers on the company account, and so they don’t really mind paying whatever is asked (the relationship between demand and price is unusually weak, so the price floats towards “eye-popping”).

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