The Australian Competition and Consumer Commission (ACCC) has released full details of proposed changes to broadband pricing submitted by NBN Co which, if approved, could see internet bills double in the next decade.
NBN Co has requested changes to the Special Access Commitment (SAU), which regulates how internet service providers can access and sell NBN services to residential and business customers. The proposed reforms cover changes to NBN Co’s existing pricing model, which if implemented could see NBN access costs continue to increase each year until the SAU expires. in 2040.
NBN Co proposal: what to expect
The ACCC had previously accepted NBN Co’s SAU in 2013, when the broadband network was still in its infancy and focused on fiber, wireless and satellite connections. With the initial deployment of NBN now complete and additional copper-based technologies comprising a significant amount of current NBN connections, NBN Co seeks to create a single regulatory framework to cover the entire network.
However, NBN Co’s proposal also includes some changes to wholesale prices, which the ACCC says could result in a “narrowing” of reasonably priced plans as well as an incentive to shift customers to faster services at lower prices. higher prices.
Some of the key UAA reforms requested by NBN Co include:
- Extend the reach of the SAU to cover all NBN network technologies, including fixed line, fixed wireless and satellite
- Zero Connectivity Virtual Circuit (CVC) charges on broadband services of 100 Mbps or more, so retailers can access these products for a fixed monthly cost
- Introducing bundled access and CVC offerings for lower speed tiers, with CVC overage charges of $8 per Mbps, per month
- Entry-level pricing changes to bring NBN 25 plans closer and in line with NBN 12
- Added new voice-only 12 Mbps plan for $12 per month
NBN Co also offered an initial price increase on NBN 25 services, in exchange for faster download speeds (10 Mbps, up from 5 Mbps). The current entry-level NBN 12 plan would remain available to retailers, but a new voice-only option would also be launched, with a proposed price of $12 per month.
How will NBN prices change?
Currently, NBN providers pay a variable CVC fee to cover the amount of bandwidth that can be offered to customers. The more CVC a provider buys, the more network capacity it can provide, which means customers will experience less congestion and better speeds. ISPs have long been pushing to kill the CVC model in favor of a fixed price per NBN service, but it looks like NBN Co’s counteroffer will seek to recoup lost CVC revenue by regularly charging fat higher for the most popular speed levels.
While moving to a simpler flat monthly cost for high-speed services looks good on paper, currently less than 20% of NBN residential users have plans in this category. The vast majority of Australians prefer slower speed tiers, with 58% of households on NBN 50 plans in March 2022. Unfortunately, the ACCC believes these customers will be among the hardest hit by the pricing model offered by NBN Co.
The ACCC predicts that wholesale rates for plans up to 100 Mbps will increase, forcing retailers to pay the same costs for both NBN 50 and NBN 100 plans over the next few years. This in turn will push customers towards faster speed tiers, regardless of their actual speed and usage requirements, meaning homes and businesses are likely to pay more for services they don’t need. no need.
While the ACCC has acknowledged that it is difficult to predict exact price increases, its consultation document covering the proposed changes states that “applying NBN Co’s current forecast, the maximum allowable cost for retailers to acquire the entry-level speed level would double by around 2033, and continue to increase towards $104 per month in nominal terms by 2040.”
The ACCC cited figures from the Bureau of Communications and Arts Research as one of the main reasons why migrating to fast and extra-fast plans may be unnecessary for many Australian homes. According to the Bureau’s forecast, the median household speed requirement in 2028 will be just 29 Mbps, and 99.9% of homes will not need speeds above 78 Mbps.
Three major telecom operators: NBN Co’s proposal “disappointing”
Unsurprisingly, Australia’s three largest telecom operators hit back at NBN Co’s proposed changes, collectively calling for a model that would put customers first and keep broadband affordable for all families.
Andrew Sheridan, vice-president of regulatory and public affairs at Optus, said these UAA reforms “would affect everyone” and called on the new Labor government to intervene.
“Retail providers like Optus will have no choice but to pass on proposed cost increases to our customers, knowing that many are already feeling the pain of rising household costs,” Mr Sheridan said.
“The new government has an opportunity to refocus NBN Co’s priorities on its core objective of ensuring that all Australians have access to fast broadband at affordable prices and at the lowest cost.”
Similarly, a Telstra spokesperson told Canstar Blue that NBN Co’s SAU “failed to deliver” what was needed to secure Australia’s digital future, and also called for the intervention of the government.
“Now is clearly the time for the ACCC to chart a path forward that delivers more certainty for the marketplace, better wholesale prices and services for customers, and sustainable returns for retailers.
“We believe there is an opportunity for government to play a role here as well, with an emphasis on driving adoption through affordability and innovation rather than historical cost recovery.”
TPG Telecom, which includes TPG, Vodafone, iiNet, Internode and Westnet, had perhaps the harshest response, with a company spokesperson calling the proposed pricing model convoluted.
“This proposal will effectively make entry-level broadband in Australia a thing of the past and is a slap in the face for those who rely on affordable broadband to stay connected for work, study and play,” the spokesperson said.
“NBN’s price proposal can be summed up as price increases and no improvements.”
Related: How to save money on your internet bill
Cost reduction is key to retaining NBN customers
Already high wholesale prices for NBN products have already caused many customers to seek cheaper and more reliable alternatives, and NBN Co expects more than 260,000 customers to upgrade to 4G and 5G wireless broadband during the fiscal year. 2022. NBN service providers are also promoting 5G home internet as coverage increases, with TPG Telecom brands in particular revising their 5G broadband products this week to offer comparatively lower prices than high NBN. debit.
If NBN Co is to retain customers and ensure the network’s long-term success, keeping wholesale costs affordable will help drive competition among retailers. This will lead to more broadband options for homes and businesses, and better pricing for what is now an essential service for the majority of Australians.
Currently, the SAU changes requested by NBN Co are not locked in and the ACCC will consult on the proposal before making a final decision. The ACCC accepts comments on this subject until July 8, 2022.
Compare NBN plans
Evening Unlimited Premium Speed Packages (NBN 100)
The following table shows a selection of published unlimited Premium Party Speed (NBN 100) packages on Canstar Blue’s database, listed in order of standard monthly cost, from lowest to highest, then alphabetically by provider. Use our comparison tool above to see plans from a range of other providers. This is a selection of products with links to reference partners.
Unlimited Standard Plus Evening Speed Plans (NBN 50)
The following table shows a selection of published unlimited Standard Plus Evening Speed (NBN 50) packages on Canstar Blue’s database, listed in order of standard monthly cost, from lowest to highest, then alphabetically by provider. Use our comparison tool above to see plans from a range of other providers. This is a selection of products with links to reference partners.
Evening Unlimited Standard Speed Packages (NBN 25)
The following table shows a selection of published unlimited Standard Party Speed (NBN 25) packages on Canstar Blue’s database, listed in order of standard monthly cost, from lowest to highest, then alphabetically by provider. Use our comparison tool above to see plans from a range of other providers. This is a selection of products with links to reference partners.
Evening Unlimited Base Speed Packages (NBN 12)
The following table shows a selection of published unlimited Evening base speed (NBN 12) packages on Canstar Blue’s database, listed in order of standard monthly cost, from lowest to highest, then alphabetically by provider. Use our comparison tool above to see plans from a range of other providers. This is a selection of products with links to reference partners.