+ Sunday August 18th, 2019

Opinions on the NBN vary across the spectrum, but one thing most will probably concede is that the service offering is far from perfect. There’s been a growing chorus from NBN retailers calling for a review of the wholesale pricing structure which would – if accepted – ultimately lead to better and fairer pricing for consumers.

As Telstra CEO Andy Penn points out in his blog post on Telstra Exchange, it’s quite realistic to consider our digital infrastructure as being amongst our country’s most important. We need to do what we can to get it right, otherwise Australia could be left behind relative to other nations.

Studies have shown that Australia’s wholesale broadband network prices are among the highest in the world already, especially when you look at “true broadband” speeds – 50mbps and above.

Telstra’s interest isn’t entirely selfless, and no corporate should really be expected to act selflessly anyway, but there is a benefit for consumers here as well. Telstra makes the clear point that the retail business model of the NBN is at risk from the current pricing structure which makes it difficult for NBN retailers to offer good prices to customers while still making enough profit to make the venture worthwhile.

As Penn correctly points out, an industry where wholesale prices result in next to zero margins for downstream retailers isn’t remotely sustainable. Ultimately the only outcomes will be retailers pulling out because they can’t remain competitive and continue to operate, or prices will have to go up, meaning the consumer loses again.

Telstra makes the following recommendations, many of which have been echoed by other providers previously:

  1. Removal of the separate volume-based pricing charge (CVC).
  2. Simpler single-point pricing for the standard nbn speed tiers (50/20 and 100/40) with prices reduced by around $20.
  3. Lowering of the price for superfast services (250 Mbit and up) to under $100.
  4. Introduction of a $10 per month voice-only service.
  5. Introduction of a wholesale price discount for targeted vulnerable and low-income customers in need.

Granted, most consumers don’t really need the speeds of 100mbps (and higher plans which aren’t actively promoted) in 2019, but there’s a growing number who are taking them up – 100mbps does a lot for high definition streaming, and those households with lots of devices. In 1999, I would’ve thought it impossible to swamp a 1mbps T1 line .. and in 2019, swamping a 50mbps connection isn’t hard at all.

It’s not going to take many years until 50mbps is considered positively archaic, and we – and the NBN – need to be positioned appropriately to meet the demand as it comes, not play catchup after the fact.

One need only look at what’s taking place in the UK, in NZ, in Spain, and countless other countries around the world where wholesale broadband rollouts are being done better, cheaper, and with more affordable, faster plans for end users. Our NBN feels like a poor, poor cousin … if it’s related at all.

Chris Rowland   Managing Editor

Chris Rowland

Chris has been at the forefront of smartphone reporting in Australia since smartphones were a thing, and has used mobile phones since they came with giant lead-acid batteries that were "transportable" and were carried in a shoulder bag.

Today, Chris publishes one of Australia's most popular technology websites, Ausdroid. His interests include mobile (of course), as well as connected technology and how it can make all our lives easier.

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Adam
Ausdroid Reader

Unfortunately, regardless of what changes with pricing, there are many, many properties that, like ours, lost in the NBN roll out lottery and who will never achieve 50 Mbps without network hardware changes. I would happily pay for a 100 Mbps connection, but when the best we can achieve is 34 Mbps over long lengths of copper to the node, I’d be throwing my money away. The original Labor NBN may have had some flaws, but the LNP changes to it were criminal and will hold this country back for decades to come.

Mathew
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Mathew

Being willing to pay for a 100Mbps puts you a minority of 10% according to ACCC NBN Wholesale Market Indicators report.

For most Australians the cheaper wholesale prices under LNP (CVC cut from $20 to $8/Mbps and bundling CVC with AVC) mean they are on faster plans than expected under Labor’s pricing model.

Whilst I don’t support cutting CVC prices because I think data provides an important revenue growth for NBNCo, most are arguing for cheaper data in preference to faster speeds.

Jeni Skunk
Ausdroid Reader

The Real FTTP NBN is the forcibly made poor, cousin to overseas countries. It’s the cousin who had its inheritance forcibly ripped from it.
The Liebral FTTN/MTM/HFC/FTTC Notional Fraudband Notwork, despite calling itself the NBN, is a relative in name only to what is overseas.

Snoozin
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Snoozin

They definitely need to look at voice-only service pricing for all the retired/pensioners who only want a phone.

Mathew
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Mathew

A mobile phone with $10 unlimited calls plan is cheaper than even an old plain copper land line. The reality is that a mobile plan with unlimited calls is at best the same cost as an NBN land line option with unlimited calls.

Also the demographic who don’t have a mobile phone continues to shrink.

Snoozin
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Snoozin

There is allot on pensioners out there who do not wish to embrace mobile technology, which I know of one. He also has very poor mobile reception. All he wants is an affordable home phone account plan.
I’ve been discussing VOIP with a DiD with him, but that also needs a decent low cost internet plan that is around, or cheaper than his current home phone plan.
The item #4 above would best suit him.

Mathew
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Mathew

Simplest option is to cut AVC to $10 (or even free) and increase CVC to make up the shortfalll. People on low income can have a cheap service subsidised by those who use the system (download large amounts of data).

chris
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chris

I am on the 100mb speed and it is awesome. Just me and yet I can stream in 4k and browse, download files etc without thinking about it.
I could easily get by with 50mb connection but am paying for the 100mb connection because it’s nice and because I always said 100mb should be the minimum.

Mathew
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Mathew

I would argue the smartest decision Labor made with the NBN was volume based pricing. Firstly, as demand for data increased, increased CVC revenue would pay for network upgrades. Secondly NBNCo would be incentivised to ensure the network was congestion free to sell more data (CVC). The most stupid decision Labor made was to re-introduce speed tiers into the Australian market. When less than 10% on FTTP were connecting at 100Mbps it was an easy argument for the Liberals to mount that demand for faster speeds didn’t exist. If speed tiers didn’t exist on the NBN, all the connections would… Read more »

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