Vodafone drops NBN prices in 'aggressive' push for customers
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Vodafone drops NBN prices in 'aggressive' push for customers

Competition among the major telecommunications companies is heating up on National Broadband Network plans, with Vodafone Hutchison Australia cutting its prices to attract new customers during the final years of the roll out.

Low margins for telecommunications companies selling NBN to consumers had not stopped Vodafone from dropping the price on its unlimited plans on Tuesday to attract new households, chief commercial officer Ben McIntosh told Fairfax Media.

The NBN is mid-way through its roll out.

The NBN is mid-way through its roll out.Credit:Peter Braig

One in five people currently coming to Vodafone for NBN connections are new to the telco and switching from a rival provider, as part of a “churn event” giving millions of Australians a chance to re-think who supplies their internet connection and providers the opportunity to attract new customers.

“The NBN saw telcos going back to as if it was 1994 in the mobile industry with connection fees – it’s ripe for the picking to give customers a better deal,” Mr McIntosh said.

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Vodafone launched an NBN offering with a back-up mobile connection in December, with 25Mbps plans at $69 a month, 50Mbps at $79 and 100Mbps at $99.

Vodafone has long said the highly competitive telecommunications space would win or lose customers based on service and technology, however, the provider has now chosen to drop prices significantly to lure in households on the NBN.

The cheapest NBN product from the telco, for 25Mbps, has now been dropped to $58 a month - an $11 discount. The 50Mbps plans are $69 a month, or $59 for existing mobile customers, with 100Mbps plans at $89 or $79 for current customers.

All existing customers will be moved onto the cheaper price plans.

Mr McIntosh said the “lean, nimble” nature of Vodafone as a telco allows the business to reduce prices, even when there are already declining revenue per user figures causing major providers to feel the pinch.

Telstra has cited growing competition in the mobile sector, as well as the effects of the NBN's roll out, as behind a major change in its business strategy including reducing the workforce by about 8000 employees.

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Mr McIntosh said it was not a "race to the bottom", with the business working hard to keep running costs low so prices could be kept down.

“We have a high-quality modem so we don’t get tech support calls, we have simple bills so we don’t have issues with customers complaining, this means there’s reduced costs all round,” he said.

“Because we’ve got a 4G back-up we don’t get inundated with people with connection issues,” he said.

The 4G sim card in the modem switches to Vodafone’s mobile network if there is an issue with an NBN outage or delay in connection. Being left without internet when moving onto the NBN has been a major customer complaint during the roll out, which is scheduled to be complete in 2020.

“These are super aggressive monthly prices, but it’s the other details as well. There’s no contract, no upfront price, no connection fee and no modem fee like some of the big competition has,” he said.

Vodafone’s speeds are yet to be counted as part of the Australian Competition and Consumer Commission’s broadband measurements, which relies on enough volunteers to have a representative sample for a provider.

Jennifer Duke writes about media and telecommunications.

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