Is Spark’s new flexi-fibre service ‘Unplan’ dead on arrival?

by Peter Griffin / 12 October, 2018
Spark's latest internet offer.

Spark's latest internet offer.

Spark's new broadband offer, Unplan, will 'flex' with you, dropping your bill if your usage drops but it might be pointless when our usage is skyrocketing.

Kiwis are clamouring to jump on the country’s ultrafast broadband network with fibre connections jumping 54 per cent to nearly 600,000 in the last year.

And our appetite for data-heavy features like video streaming and online games has driven the move to unlimited data plans, with 70 per cent of broadband plans now offered with no monthly data cap, up from 20 per cent in 2017, according to Statistics New Zealand’s latest internet service provider survey.

While ultrafast broadband has been a boon for consumers, if not the contractors who helped construct the network, competition in the broadband market is cut-throat, with thin margins forcing the broadband providers to cut costs to stay alive.

Unplanned changes

Now Spark, the country’s largest internet provider, has bridged the traditional divide between capped and unlimited plans with Unplan, which is available to existing and new customers for fibre and wireless broadband plans on a 12-month contract.

It works like this – if you consume more than 120GB (gigabytes) of data on one of Spark’s fibre or wireless entry-level 30Mbps (megabits per second) broadband plans, you’ll pay $85 a month (phone line and entertainment packages are extra).

If your usage drops to between 60GB and 120GB, you’ll pay $75 and dipping below 60GB for the month will see your monthly bill drop to $65.

There’s a definite logic to Spark’s thinking:

“Because sometimes it’s winter, and all you want to do is curl up on the sofa and enjoy nights of TV and movie marathons. But then suddenly it’s summer and you’re away at the weekends, enjoying BBQs and days at the beach with friends and families and your broadband starts to feel a little unloved,” the company explained this week as it launched Unplan.

“Or take another scenario: you use about the same amount of data each month – but then the family comes to stay and your data use goes through the roof.”

These are scenarios we can all relate to. Unplan is great in principle, but here’s the problem – average monthly usage on the fibre network run by Chorus had reached 250GB per connection by December 2017 according to the company’s own figures and is now closer to 300GB per month.

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Indeed, the upward trend in monthly data usage is only projected to continue as faster connections allow us to take advantage of more high-bandwidth applications and so called Internet of Things (IoT) devices communicate constantly in our homes.

“We’re forecasting average monthly data usage of 680GB per household by 2020 based on historical growth rates,” Chorus said in June.

Slim pickings

So the chances of regularly dipping beneath 120GB per month and getting that $10 or $20 discount are seemingly slim for fibre users.

Spark spokesperson Ellie Cross said that average monthly data usage by Spark residential fibre customers has sat at 200GB, however, the median monthly usage for this group is 130GB. 

"This demonstrates that we have a good proportion of customers who are not using anything like what Chorus are seeing at a network level – and for whom the Unplan should be a compelling offer," said Cross.

Thousands of Spark customers had already signed up to Unplan since the new plan was released late last week, she said.

Unplan would really deliver more value to Spark’s customer base still sitting on copper line (ADSL and VDSL) connections, but it isn’t available to them. Spark has no incentive to do that as it wants to transfer customers to fibre or its wireless broadband product which delivers better margins.

Those copper households are more likely to be casual broadband users who keep a closer eye on their data usage and therefore are more likely to take advantage of the low-usage monthly discounts.

Before long, Spark will have to revise up the monthly usage bands of the Unplan offering for it to offer tangible savings to its fibre broadband subscribers. A more realistic scenario would be to set the full-price threshold at 350GB per month, with a $10 discount if you go below 250GB and $20 off if you drop below 100GB of data use in a month.

Cross said Spark regularly reviewed its broadband plans so would consider changing the Unplan tiers if necessary as broadband usage increased overall.

"Fundamentally we recognise that people will want to see the ability to move between tiers as a key advantage of being on the plan, so we’ll want to maintain that benefit for customers."

Still, as a Spark broadband customer who used virtually zero data in August as we decamped to Europe for the tail end of their summer, the idea of getting a $20 discount for our lack of usage is very appealing. That’s where the real value for Unplan subscribers will come in – those extended periods when you are away from home and your broadband connection.

But you’ve long been able to put your gym membership on hold while you travel or to cancel Sky Sport, or Netflix for the month you are away. Unplan isn’t even going that far, as you still pay at least $65 a month to keep your broadband connection active.

But it appeals to users who occasionally see their usage spike, like when the extended family visits with smartphones and tablets in hand, and don’t want to fret about going over their capped data limit.

Fibre customers won't get much out of Unplan despite its growth.

Fibre customers won't get much out of Unplan despite its growth.

Entertaining choice

More interesting is the Unplan entertainment package, which is really symbolic of where the internet providers are differentiating themselves – on the services bundled with broadband. For an extra $10 a month, subscribers get Spark’s streaming service Lightbox and six months of access to Netflix, after which a Netflix subscription is required. Sky’s Fanpass sports streaming video service is also available for $30 on a 12-month contract.

That is starting to look like an attractive entertainment package, which could be bolstered further next year when Spark and TVNZ deliver the Rugby World Cup matches via online streaming.

Unplan may have the effect of retaining some Spark subscribers who were thinking of jumping ship. It may also spur Spark’s rivals to offer something similar as they all seek to escape the churn of subscribers between them as fickle customers chase the best deals.

The top five players’ unlimited fibre monthly plans

Note: Prices below are just for broadband. Phone line and entertainment packages are extra.

Spark 

Unplan (12-month contract)

Fibre Basic (30Mbps)

$85 for usage above 120GB

$75 for between 60GB and 120GB

$65 for less than 60GB

Fibre 100

$95 for usage above 120GB

$85 for between 60GB and 120GB

$75 for less than 60GB

Fibre 200

$120 for usage above 120 GB

$110 for for between 60-120GB

$100 for less than 60GB

Fibre Max (up to 900Mbps)
$130 for usage above 120 GB

$120 for for between 60-120GB

$110 for less than 60GB

More on the terms and conditions for Unplan offerings

Vodafone

$89.99 (ADSL, VDSL Fibre 100, FibreX 200, 12-month contract)

2Degrees

$75 (ADSL, VDSL, or fibre 100Mbps, 12-month contract)

$100 (fibre broadband up to 900Mbps, 12-month contract)

Orcon

$84.99 Fibre 100 (12 month contract)

$89.95 Fibre 100 (24 month contract)

$99.95 Gigantic Fibre (900/400Mbps, 12-month contract)

Slingshot

$84.95 (ADSL, VDSL or Fibre 100, 12-month contract)

$99.95 (Fibre up to 900Mbps, 12-month contract)

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