ACCC wants price anchor on basic nbn plans

The ACCC is calling for prices of basic nbn plans to be anchored to their equivalent ADSL services in order to address the growing issue of the lack of affordability for those on lower incomes.

During remarks to the CommsDay summit in Sydney yesterday, ACCC Chair Rod Sims said prices of low-speed nbn plans offered to customers are regularly at least $10 per month higher than the prices customers pay for ADSL internet connections offering equivalent speeds.

Sims attributed the price increases to new NBN Co wholesale pricing, which has substantially increased the cost to retail service providers of offering a basic 12 Mbps nbn service, to the extent the prices are now close to the cost of a 50 Mbps service.

This has resulted in fewer providers willing to even offer a 12 Mbps service, while those remaining have increased prices due to margin pressure. In one extreme example, Sims said Optus increased its price for new entry-level nbn customers to $80 per month — $10 more than the company offers its 50 Mbps plan.

“There is a fundamental question of fairness here for those on low incomes. We believe NBN Co’s entry-level services should be anchored to existing ADSL pricing. This is only fair to consumers because they have no choice but to move to the nbn as their existing services are being withdrawn,” he said.

“But more importantly, consumers that already want the higher speeds that the nbn makes possible also stand to benefit from pricing that reflects the additional value.”

But NBN Co is under political pressure to deliver a return on investment despite the ballooning costs of the rollout. The government’s multitechnology mix model also leaves the network reliant on ageing copper last-mile connections in many areas, and it will be costly to replace this copper with fibre.

Also at the CommsDay summit, representatives of Optus and NetComm both suggested that 5G mobile technology could provide a solution for upgrading these copper connections without incurring hefty fibre deployment costs.

Optus CEO Allen Lew suggested a model whereby NBN Co leases wholesale 5G capacity from mobile operators, selecting the provider for a given area based on the lowest bid.

Lew said fixed wireless based 5G could present a “great opportunity” for NBN Co to improve the currently “underwhelming” nbn experience for many customers.

He said the exact model could be fashioned after the government’s Mobile Black Spot program, which involves operators submitting tenders to receive subsidies to deploy mobile equipment in unprofitable rural areas.

NetComm Director of Technology Strategy Els Baert also said that 5G could represent a significant opportunity rather than a threat to the nbn. He said it is clear that 5G would be able to deliver a significant uplift in performance compared to the current nbn fixed wireless service.

“NBN Co has deployed a huge amount of fibre right across the country and now has tens of thousands of powered nodes around the country as well. These assets put NBN Co in a good position for 5G which will require more fibre and powered assets,” he said.

“The challenges faced in building a full FTTP network are still here today. Taking new fibre all the way down long country roads is going to take an awfully long time to do and cost a lot of money — but 5G Fixed Wireless could offer a solution in some areas.”

Image courtesy NBN Co.