Why are there major price differences between TPG and Telstra?

  • TPG offers users their Standard plan with Unlimited Data at just $59.99 a month, with no lock-in contract.
  • Why is it that a 500GB plan with Telstra NBN costs you almost DOUBLE that of an unlimited data plan with Dodo or TPG?
  • Telstra is a massive company that does indeed pump a lot of funds into areas such as advertising, technical support, credit management and marketing

When hunting around for a broadband connection, you will come across a wide variety of offers in the market. From highly affordable plans that provide you with heaps of data, to pricier options that come alongside a wide variety of bonus services - there is always a bundle or deal that is suited to any and every individual’s needs. With this said, have you ever wondered why there seems to be such a huge price gap between the low and high end of the market when it comes to something as ubiquitous as an internet connection?

Being the human beings that we are, all of us love a great deal. We all like paying the cheapest prices whenever possible, but are also often plagued by a ‘too good to be true’ sense that you get when you notice a massive gulf between two companies. So, why are some companies offering services that are cheap as chips, and others providing exorbitantly priced services to users?

First of all, let us look into 3 popular plans from TPG, Dodo and Telstra. TPG offers users their Standard plan with Unlimited Data at just $59.99 a month, with no lock-in contract. Similarly, Dodo offers users their Unlimited Data plan at also $59.99 a month on their standard speed. From a financial point of view, you are truly getting a bang for your buck with these cost-friendly plans. However, when we look at Telstra’s plans, we see that bundles start off at $90 per month for just 500GB of data and go up to a whopping $140 a month for 1500GB of data (also known as unlimited to most folks).

So, why is it that a 500GB plan with Telstra NBN costs you almost DOUBLE that of an unlimited data plan with Dodo or TPG? It doesn’t seem right, does it? Well, in order to find out the answer as to why TPG and Dodo are so cheap whilst Telstra is so expensive, we need to look into the various differentiators when it comes to how these companies.

Each company that provides telecommunications to the general public has a pretty standard checklist of expenses that they have to pay for. In a very, very simplified form, this might be broken down into sectors such as Wholesale Access Price to Infrastructure (ie cables and networks that deliver your connection), Payroll for Customer Service, Technical Support, Credit Management, Engineering Staff and Back Office. On top of that, budget has to be spent on Advertising and Marketing as well.

An ISP can limit their exposure to these costs in a few ways, whether it comes down to them owning their own infrastructure rather than leasing it off another firm. Furthermore, costs can be cut by outsourcing customer service and technical support to offshore middle-income companies such as the Phillipines and India. Allowing for automated Direct Debit only, billing in advance instead of in arrears (thus eliminating chasing up customers for unpaid fees), outsourcing engineering to contractors and minimal spending on marketing and advertising  are also other strategies that an ISP can use to reduce their costs.

 

Thus, with all these factors taken into consideration, you can understand or start to see why there may be such huge price gaps between various ISPs and the services that they provide. Because Telstra is a massive company that does indeed pump a lot of funds into areas such as advertising, technical support, credit management and marketing, you will be expecting to see higher prices when it comes to their NBN connections, as compared to companies such as TPG and Dodo. At the end of the day, the decision is truly up to you - what do you think suits your needs best? Which company provides you with exactly what you are looking for? Higher prices do often come with slightly more perks, but if you are looking for a simple and basic NBN connection, then you may benefit from choosing an ISP that provides fluff-free services at a lower cost.