From May 6, Internode will cease new sales of its 8 Megabit per second (Mbps) and Extreme ADSL2+ HOME plans in Tasmania - a decision made to protect service performance for its existing customers. Tasmanian customers with existing 8 Mbps and Extreme ADSL2+ HOME broadband plans can continue on their existing plans.

From Tuesday, Tasmanian residents can purchase HOME broadband plans running at standard ADSL speeds up to 1500/256k. However, Internode will also continue to offer SOHO and Business plans at any speed, up to and including Extreme ADSL2+.

Currently, broadband backhaul capacity across Bass Strait is limited to a monopoly supplier, Telstra. As a result, it is six times more expensive for Internode to transfer data between Melbourne and Hobart than it is to move data between Melbourne and the United States.

Internode Managing Director Simon Hackett said Internode had reluctantly decided to suspend sales of the highest speed HOME broadband plans, due to the high cost of backhaul services to Tasmania. "Unfortunately, the cost of bandwidth to Tasmania remains appalling, as often happens under monopoly situations," he said.

"We've recently completed a major upgrade of our link to Tasmania, but continuing to sign up new customers for high-speed, lower-cost HOME plans would quickly create new congestion issues."

"While we know this decision will disappoint some people, we need to properly service our existing Tasmanian customers with the resources we have in place. Until transmission costs decline, this is the best way of doing it."

"Based on our experience, we expect the arrival of infrastructure competition, with the eventual launch of the long-awaited Basslink cable across Bass Strait, to put downward pressure on prices."

From Tuesday, May 6, Internode will cease to accept new orders for HOME ADSL 8 Mbps and HOME Extreme ADSL2+ services in Tasmania. Similarly, the Internode online plan changer will no longer offer these plans to existing Tasmanian services; and single service migrations to HOME Extreme ADSL2+ in Tasmania will no longer be available.

Mr. Hackett said Tasmanian customers could obtain a new high speed service by selecting a SOHO broadband plan, which cost $20 per month more than a comparable HOME plan. "This cost is approximately the additional impost, on a per-user basis, that Internode pays to acquire monopoly-priced backhaul to Tasmania from the mainland," he said.

"This exemplifies the effective 'tax' on retail customer services that is generated when the underlying service economics are the prisoner of monopoly infrastructure. It underscores the potential for national retail broadband prices to rise, should Telstra construct a monopoly-owned FTTN network."