Vodafone starts NBN price war
VODAFONE says it wants to start a price war in the home broadband market and has released new NBN plans as a way of firing the first shot.
The National Broadband Network has allowed a bunch of new players to easily enter the home broadband market, delivering services to end users via the wholesale network provider.
Vodafone has used aggressive price tactics in the mobile market to court customers and hopes a similar strategy can prove equally successful when it comes to home internet.
The telco's Chief Commercial Officer, Ben McIntosh, said the company wanted to take the highly competitive "price wars" taking place in the mobile market and bring the same competitiveness to home broadband customers.
The company has announced a new cheaper pricing structure for its NBN plans today, giving Vodafone mobile customers access to one of the cheapest plans on the market.
The telco launched its NBN plans in December and Mr McIntosh believes the market "is ripe for the picking".
"Providers in this market have gone back to 1994, wrapping services up in connection fees, other upfront costs and lock in contracts," he said.
The company offers just three different broadband plans. Mr Mcintosh said the simplicity made it "easy for us and easy for the customer" and allowed the telco to save on costs and reduce prices.
Vodafone has gotten rid of the lowest tier speed plan of 12 Mbps and reduced prices by about $10 per month across its plans:
• Essential NBN (25 Mbps speed tier) for $58 per month
• Essential+ NBN (50 Mbps speed tier) for $69 per month ($59 for existing postpaid mobile customers)
• Premium NBN (100 Mbps speed tier) for $89 per month ($79 for existing postpaid mobile customers)
Vodafone's broadband plans come with 30 day Network Satisfaction Guarantee, no connection fees, no lock-in contracts and a modem with built in backup 4G capability.
If you stay with the telco for 36 months, the modem is completely free but if not, it costs $5 per month for each month short of the 36 months.
If you're already with Vodafone for your home internet, you will automatically be transitioned onto the new price points.
As the NBN continues its rollout, millions of Australians will be forced to consider a new internet plan as they migrate onto the network. Vodafone hopes it can capture some of those customers and Mr McIntosh implored Australians to shop around when going through that process.
"Don't just stick with your incumbent, shop around," he said.
"Hopefully that's with us but shop around and look at upfront costs and don't sign a contract."
While he was at pains to stress the lack of any upfront costs for the Vodafone NBN plans, the monthly charges also compare favourably to competitors.
Aussie Broadband and TPG also charge $69 per month for their 50Mbps NBN service.
Meanwhile Internode and iiNet charge $79 per month for unlimited NBN broadband at those speeds while a similar plan with Telstra's costs users $99 per month.
Retail providers like Vodafone, TPG, Telstra and Aussie Broadband have been helped by recent changes to the amount that NBN charges retail providers after widespread complaints from the industry.
"We think the NBN are on a pretty good path here," Mr McIntosh said. "The early days with the complications around the CVC have been ironed out and what customers will see now is a lot more straight forward pricing from the telcos that encourage speed."
Since entering the market about 8 months ago, Vodafone says it has secured tens of thousands of internet customers.
"We're obviously a new entrant, but we're connecting thousand each month," Mr McIntosh said. While he did not want to disclose the number of broadband customers the company has signed up, he put the number in "the tens of thousands."
Vodafone hopes the new pricing strategy will be enough to prompt consumers to think about switching providers after sponsoring research that showed millions of Australians are too lazy to bother, even when they know they can get a better deal elsewhere.
"Over 6 million Australians say they are unlikely to switch even though they know they can get a better deal. People are losing out on up to $480 of savings every year," Mr McIntosh said in a statement.
The research, conducted by Galaxy, also found that the majority of those with internet access in the home (69 per cent) were dissatisfied with some aspect of their internet service. The principal complaints are in regard to the speed (34 per cent), reliability (31 per cent) and cost (30 per cent).