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How to find the best Naked DSL plan

Richard Chirgwin

Naked ADSL services have been with us for a while now, so it's probably time to check out the value of different plan

As you will know from previous writings on the topic, "plan value" is a slippery concept at the best of times. DSL plans run from the entry-level right up to allowances big enough to run a small radio-telescope, and the effective cost per bit varies hugely from the top of the market to the bottom.

For this exercise in analysis, I've made a couple of decisions.

The first is to stick to providers that own the infrastructure, rather than resellers, because that keeps the scope of the project under control. The eight providers included in this article are Adam Internet, Amcom, iiNet, Internode, iPrimus, Netspace, Optus and TPG.

Naked is More Expensive, for a reason
 

The industry certainly has adopted Naked services with great enthusiasm. Even this sample of providers yielded 101 different Naked ADSL2+ plans ranging from $48.95 per month up to $139.95 per month.

That probably sounds expensive to those familiar with cheap-and-cheerful retail ADSL services that can start at $19.95 per month, so it's important to remember that word "Naked". For the unitiated, it means that there's no longer a dialtone on the wire that delivers the service.

Most ADSL services in Australia today share the phone line with a telephone service of some kind; either directly from Telstra, or from the ADSL

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provider, if that provider is reselling Telstra telephone services. Keeping the Telstra line "intact" - that is, with dialtone still operating - means you have to rent the line from Telstra, whose minimum (Homeline Basic) costs $20.95           per month line rental.

A naked service gets rid of this line rental. The DSL provider, instead, rents the line with no Telstra service, and uses it solely to deliver ADSL services.

The question for all users is whether they want to get rid of the phone line - because if you take a naked service and still want a phone, you will have to get it somehow. You can either decide, as is incresingly the case, that a mobile provides all the telephony you need or, if you want a "phone on the desk" and low-cost calls, you can subscribe to a VoIP service either from your ISP or from someone else, and use the broadband to carry your phone calls.

If you go to a third party (someone other than your ISP) it's probably important to find out whether the VoIP service supports emergency calling.

It's probably worth remarking that there is a big potential benefit for ISPs in offering phone services: it makes customers more sticky. In the world of gmail - or for the adventurous, low-cost domain names and hosting - e-mail is no longer a particularly sticky application. But if someone has their home phone number with a particular ISP, and the home phone is important enough to them, then they'll think twice before switching ISPs because that means letting people know about the new phone number.

What's Analysed Here
 

The analysis of the 101 plans includes the monthly fee, the download allowance, and the connection / activation fee.

To provide a metric more meaningful than just a simple comparison of prices, I've used the download allowance as the common feature that normalises the cost down to a per-gigabyte, per-month measure, including the service activation fee over the life of the plan. There are some 30 plans with no minimum contract term. To allow the activation fee to be spread across a reasonable period, these are compared to plans with a six-month contract term. Twelve- and eighteen-month plans are compared to each other, while 24-month plans make up the third set.

Download allowances are also hugely variable, ranging from 2.5 GB per month (1 GB peak, 1.5 GB offpeak) up to 260 GB per month (100 GB peak, 160 GB offpeak).

Since there's no sense in comparing a 2.5 GB plan to one with more than 100 times the allowance, I have calculated quartiles for each set of contract terms, and compare plans within each of the quartiles.

Up to 6 Month Plans
 

The service activation fees are, naturally, highest for short-term customers. Over 24 months, the provider can recover $150 without it making the service uncompetitive; but if the user hasn't committed to a contract term, then the activation fee provides both cost recovery and a measure of stickiness.

For contract periods up to six months, the activation fees range from $99 (Netspace) up to around $150 (Netspace, TPG, Adam Internet and Amcom all fall between $149 and $150).

The download quartiles in this set of plans is up to 10 GB, above 10 GB and up to 50 GB, above 50 GB and up to 95 GB, and above 95 GB.

The summary for this set of plans is shown in Table 1.

Table 1: Summary of Naked DSL Plans with No Contract Period

Naked Broadband Plans - up to 6 Months' Contract

 

Minimum

Per GB, per Month

 

Median

Per GB, per Month

 

Max

Per GB, per Month

 

All Plans

 

 $0.83

 

 $2.21

 

 $34.41

 

Up to 10 GB

 

 $4.57

 

 $7.89

 

 $34.41

 

More than 10 GB, up to 50 GB

 

 $2.00

 

 $2.67

 

 $3.11

 

More than 50 GB, up to 95 GB

 

 $1.64

 

 $1.89

 

 $2.12

 

Above 95 GB

 

 $0.83

 

 $1.22

 

 $1.96

 

As you can see, to get the best per-GB price, you have to be a heavy user, and if you're not, you'll find the monthly fee bruising.

In each of the bands, the lowest-cost plans were as follows:

  • Up to 10 GB – Netspace's 20 GB Naked DSL plan is the best value at $59.95, with an effective per-GB price of $4.57 (including connection fee over six months).
  • More than 10 GB, up to 50 GB – TPG's 50 G plan won in this segment, at $59.99 and an effective per-GB price of $2.00 (including connection fee over six months).
  • More than 50 GB, up to 95 GB – Adam Internet's Super offering, with 80 GB downloads at $84.95, is the best in this class with an effective per-GB price of $1.64 (including connection fee over six months).
  • More than 95 GB – TPG's 150 GB service costs $79.99 per month, an effective price of $0.83 per GB (including connection fee over six months).

And it pays to shop around: across the different plan bands, the cheapest available per-GB effective price had a 449% range. Several servives went far beyond this, with effective per-GB prices of more than $20, and in one case more than $30 per GB.

12 Month and 18 Month Plans
 

At this point, providers start dropping their connection fees somewhat, to between $59 (iPrimus) and $79.95 (TPG) to get the naked service started.

There were 26 plans in this set, from Adam Internet, Amcom, iPrimus, Netspace and TPG. The download allowance quartiles are up to 20 GB, more than 20 GB up to 50 GB, more than 50 GB up to 98.75 GB, and more than 98.75 GB. The analysis is shown in Table 2.

 Table 2: Summary of Naked DSL Plans, 12 Month and 18 Month Contracts

Naked Broadband Plans - up to 6 Months' Contract

 

Minimum

Per GB, per Month

 

Median

Per GB, per Month

 

Max

Per GB, per Month

 

All Plans

 

 $0.70

 

 $1.78

 

 $27.11

 

Up to 20 GB

 

 $3.99

 

 $7.11

 

 $27.11

 

More than 20 GB, up to 50 GB

 

 $1.59

 

 $2.43

 

 $3.80

 

More than 50 GB, up to 98.75 GB

 

 $1.41

 

 $1.57

 

 $1.68

 

Above 98.75 GB

 

 $0.70

 

 $1.02

 

 $1.36

 

Once again, it's important to pay attention to value-for-money especially at lower download allowances, with the meter maxing out at $27.11 per GB. The same plans were lowest cost in each of the download bands.

Two-Year Contracts
 

In two-year contracts, Adam Internet, Amcom, iPrimus and Netspace all have offerings waiving the connection fee. The analysis of two-year contract offerings is in Table 3.

 Table 3: Summary of Naked DSL Plans with Two-Year Contract Period

Naked Broadband Plans - up to 6 Months' Contract

 

Minimum

Per GB, per Month

 

Median

Per GB, per Month

 

Max

Per GB, per Month

 

All Plans

 

$0.69

 

$2.11

 

$24.48

 

Up to 20 GB

 

$3.75

 

$6.56

 

$24.48

 

More than 20 GB, up to 50 GB

 

$1.75

 

$2.53

 

$4.06

 

More than 50 GB, up to 90 GB

 

$1.33

 

$1.59

 

$1.90

 

Above 90 GB

 

$0.69

 

$1.09

 

$1.80

 

There are a few different names in each of the download bands, and some familiar names.Because it waives connection fees for longer contracts, Adam Internet had the lowest per-GB price in each band up to 90 GB, while iPrimus had the best per-GB price for the heavy user, for its Naked DSL Big Kahuna plan (40 GB peak, 160 GB offpeak, $109.95 per month).

Finally...

Please keep in mind that an analysis exercise like this will have one problem: by dividing offerings into arbitrary bands, you can miss services that offer allowances that take them into a higher band, but at good prices.

The most contested segment of the market is the “medium” band – in general between 20 GB and 50 GB per month. For 24 month contracts, providers whose effective price was within 10% of the cheapest in this band included Optus, iiNet, Internode, Amcom and iPrimus.

So when you take into account the reach of different networks, and features that this article doesn't discuss (such as network performance), the good news is that the Naked DSL market offers plenty of value and choice for the careful buyer.