NBN Co prepares to roll out more changes to wholesale pricing

Company looking at how to get more households on faster speeds

NBN Co has launched an industry consultation on wholesale pricing, with the network operator indicating it wants to encourage the uptake of higher speed plans as well as make NBN services more attractive to lower-income households.

The company said that its Pricing Review Consultation Paper was seeking input from telcos in five main areas, including boosting take-up in segments including low-income earners and elderly Australians.

The number of households with entry-level services that use NBN Co’s 12Mbps speed tier has been declining, according to NBN Co data released by the Australian Competition and Consumer Commission (ACCC).

ACCC head Rod Sims has indicated the commission is concerned about the affordability of services on the NBN. The ACCC chair said earlier this year NBN Co wholesale pricing changes are raising “a fundamental question of fairness” when it comes to broadband affordability for low-income households.

Sims said in April that the ACCC’s concerns could be addressed if NBN Co revisited the pricing of its entry-level services “so that there is healthy competition at the $60 price point for the supply of an unlimited NBN broadband plan with busy hour speeds that compare favourably to what was available on ADSL”.

NBN Co said today it would extend the existing Dimension-Based Discounts for RSPs until 30 June 2020. The DBD scheme provides increasing discounts to retail service providers (RSPs) depending as they purchase more capacity (CVC) per end user. The extension of the discount scheme will help provide cost certainty to telcos, NBN Co said.

“We felt it was important to provide certainty and stability to the market during the consultation period and the extension will provide us with sufficient time to engage with the industry, consider their feedback and implement any changes to our wholesale pricing constructs and data inclusions within our bundles,” NBN Co chief customer officer residential Brad Whitcomb said.

NBN also foreshadowed an increase from September 2019 in the CVC included in its bundled services that use the 100Mbps or faster wholesale speed tiers. The 500Kbps increase means that RSPs get 25 per cent more capacity for a total of 3Mbps per bundled service.

NBN Co said it was looking at revamping its high-speed products, including potentially offering a 100/20Mbps product. Currently the company offers upload speeds of 40Mbps on services with a wholesale download speed of 100Mbps, but NBN Co said that most users downloaded more data than they uploaded.

Other areas where NBN Co is seeking feedback include “improving support for RSPs in the face of increasing demand for broadband”, “creating a regular cadence for future pricing consultations”; and “making it simple and easy for RSPs to do business with NBN Co”.

The company declined to make a copy of its consultation paper available.

Whitcomb said that NBN Co is seeking to balance “the economics of our wholesale pricing structure with the commercial imperatives of RSPs, and the very reasonable expectations of residential and business customers around product affordability and choice”.

“We want to work with RSPs to find solutions to bring the benefits of high-speed broadband to more customers, particular those for whom price is a major consideration,” the NBN Co executive said.

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