http://www.internode.on.net/adsl/planchanges
Quote:
Why are some prices rising?
Internode regularly examines its plans to ensure that they offer reasonable and sustainable price points. When necessary, pricing is revised to reflect changes in the market place or in the underlying costs of providing these services to you.
Since Internode first began offering broadband services (over six years ago), our regular pricing revisions have occurred in a manner that has tended to improve value-for-money.
However, at this time, significant changes in market conditions have made it necessary (for the first time ever) to raise the prices of some of our HOME and SOHO broadband plans.
The need to make this adjustment is an exception for us - we do not expect this to become a habit.
As a part of this announcement, we're also introducing several new plans. The aim in doing so is to improve customer flexibility, in terms of the decisions that can be made by customers wishing to change plans in response to these pricing changes.
But prices have always gone down in the past - what is different this time?
In the last few years, the underlying cost of network capacity - especially international circuit capacity - has fallen substantially in real terms. This has allowed Internode to pass on cost savings to our customers, in response to that improvement in underlying network cost, and in anticipation that these improvements would continue to occur.
This year has also seen the widespread release and take-up of very high line speeds in the market, which have (in turn) raised the operational cost of providing Internet services, as key underlying costs for high performance Internet providers are influenced by peak network load requirements, in addition to also being related to average downloads over each billing period.
At the same time as these higher speed plans reached the market, the real cost of providing network capacity has ceased to follow the trend of the previous few years - in unit terms it has ceased to become cheaper over time. In many areas the effective per-user network cost has in fact risen in real terms in the last several months.
The combination of this rising network cost, and the increasing average network resource consumption driven by higher line-speed plans in our customer base has generated a 'double whammy' - especially in the very high end, high speed plans - that has made it necessary to revise our retail plan pricing to ensure that all of the plan tiers we offer can remain sustainable.
We do anticipate that future changes in the supply marketplace in the next 12-24 months will allow the underlying cost of network capacity (especially international capacity) to start improving again, as new capacity comes on-stream at more competitive price points. But in the meantime, the supply side market cost has plateaued - while customer resource demands have not.
Why are the price rises so much higher on large download plans than on smaller ones?
In the past, when typical line speeds were limited, in the main, to 1.5 megabits per second, the incremental costs of offering additional download quota at a given line speed remained fairly linear.
However, our measurements and monitoring in the last several months, and re-examining our actual costs and actual download demands, show that this is no longer the case.
Put simply - because the measured costs of providing services are indeed higher at these highest end plans, the price rises are, accordingly, concentrated toward those high end plans. This ensures that all plans are sustainable, without requiring unreasonable cross-subsidy between plan tiers.