Amid a series of reductions and discounts on its wholesale pricing, the company responsible for deploying the National Broadband Network (NBN) across Australia has proposed three new plans at the top end of its pricing structure, all with lower upload speeds than its existing plans at those tiers, in its second pricing review consultation paper.
The three plans offer 100Mbps download speeds, 20Mbps of upload; 250/25Mbps; and 1000/50Mbps. While the first of the trio will be available across all of NBN’s fixed line technology, the latter two are currently slated to only be available on fibre-to-the-premises and HFC networks, with fibre-to-the-curb being considered.
The whole cost of the new plans, respectively, will be AU$58 per month for 3.75Mbps of included capacity, AU$68 per month with 4.75Mbps of included capacity, and AU$80 per month with 5.75Mbps of included capacity.
The included capacity would be bumped up by 0.25Mbps for all three plans in May 2021.
“When viewed with included capacity, the effective charge for the new 100/20 bundle discount is 20% lower than the current 100/40 bundle discount, with an effective charge that is AU$7 lower despite having 0.75Mbps more included connectivity virtual circuit (CVC) (itself worth AU$6 based on an effective charge of AU$8/Mbps for CVC capacity),” NBN said in its paper.
“On the same basis, the effective charge of the new 1000/50 bundle discount is 67% lower than the existing 1000/400 bundle discount with an effective charge that is AU$100 lower despite having 2.75Mbps more included CVC (itself worth AU$22 based on an effective charge of AU$8/Mbps for CVC capacity).”
At the lower end of the market, NBN said it will retain the same pricing for its 12/1 service, but will reduce its charge to ISPs when “average monthly peak CVC usage across [entry-levl] services on a CVC is above 150Kbps” from AU$22.50 to AU$5.70 per service. A partial waiver will be introduced on October 1 to allow the change to take effect, with the price to reduce down to AU$4.10 per service in October next year.
On the creation of a service specifically for low income households, NBN said ISPs wanted a plan to be co-developed with them, and it would be pursed in a separate consultation process.
For its 25/5Mbps tier, NBN said it would reduce the price from AU$45 to AU$37, but would also reduce included capacity from 2Mbps to 1.25Mbps before bumping up to 1.5Mbps in May 2021, and was examining ways to bring this into effect in November. On the now standard 50Mbps tier, NBN said it would increase CVC from 2Mbps to 2.25Mbps in May 2020, and then up to 2.5Mbps in May 2021.
“We believe the higher CVC inclusions strike the right balance between helping RSPs to develop affordable solutions for Australians, giving service providers a platform where they can compete, while also allowing NBN Co to generate a fair and reasonable return so we can invest in the network,” NBN chief customer officer of residential, Brad Whitcomb said.
“While we know that some RSPs have called for the removal of CVC charges, the reality is that there is a real cost in provisioning and dimensioning the network to accommodate rising data consumption. We believe our bundled charges are the fairest way to implement a user-pays approach to wholesale pricing at this time.”
NBN also decided not to separate video data from other traffic, after only two retailers supported it.
“The majority of respondents in the first round of consultation highlighted streaming video as an important application driving the need for higher download speeds and more capacity inclusions,” Whitcomb said. “We have elected to focus development efforts on discounting that does not utilise segregated video traffic.”
The company said from December it would look to reduce service transfer fees from AU$22.50 to AU$5, as well as changing the way CVC breaches are calculated and implemented.
Going forward, the broadband wholesaler is proposing a yearly pricing review process and giving ISPs a pricing roadmap two years into the future.
The final outcomes of the pricing review are slated to be announced in November.
Speaking at the Australian Communications Consumer Action Network (ACCAN) national conference in Sydney last week, Vocus CEO Kevin Russell said the CVC charge is a download tax.
“It is a completely artificial tax. It charges something for nothing. It creates artificial scarcity where there is none,” he said.
“This approach is inconsistent with almost every other telecoms market around the world, where pricing doesn’t penalise higher usage. It is inconsistent with the underlying cost of the product, which does not increase with greater usage. And it is inconsistent with consumer expectations for broadband at a fixed monthly price.”
Russell also said the Australian Competition and Consumer Commission has the ability to regulate pricing on NBN’s fibre-to-the-node, fibre-to-the-basement, fibre-to-the-curb, and HFC networks, as only the fibre-to-the-premises network was covered by the 2013 Special Access Undertaking between the ACCC and NBN.
“If NBN won’t set prices which are fair for people on low incomes, the ACCC has the fallback option of making an access determination, which would give it the power to directly regulate pricing for those 7 million premises,” Russell said.
“Speaking on behalf of our NBN customers, if NBN isn’t prepared to act, I do hope that the ACCC is.”
In July, a study conducted by Link Economics on behalf of Telstra found Australia has the most expensive broadband in the world, and when it slips to second place, Austria takes out top spot.
Telstra was behind the idea of scrapping the CVC charge, as well as lowering the price of plans faster than 250Mbps to less than AU$100, and creating a AU$10 per month voice only plan, as well as a wholesale discount for vulnerable and low income customers.
“By the end of the NBN migration period we expect the effective wholesale price for 50Mbit bundles to be AU$52-AU$55, and the effective price for 100Mbit bundles to reach AU$73-AU$75,” Telstra CEO Andy Penn wrote.
“At those prices, once you add sustainable margins, the risk is that retail prices will increase to a point they become unaffordable for some customers.”
At its annual general meeting last year, Penn called for the halving of NBN’s wholesale price.
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