Budget NBN offering unlikely to hit it big

Entry-level fibre offering coming, but ISPs don't expect high uptake

A new entry-level broadband offering planned for introduction by internet service providers over the National Broadband Network is unlikely to boost adoption, according to Internode.

As part of its redacted business plan released in December last year, wholesale operator NBN Co confirmed it would offer an entry-level service providing 12 megabits per second (Mbps) downstream and 1Mbps upstream for fibre-to-the-home customers at $24 per month wholesale. Retail prices are expected to start from $56 a month for consumers.

However, the small difference in cost when compared to the next cheapest option - at 25Mbps/5Mbps - is unlikely to provide an attractive case, according to Internode product manager, Jim Kellett.

“My speculation is that 12/1Mbps is really just there to align with the wireless [and satellite] offering,” Kellett told Computerworld Australia.

“My expectation is that 25/5Mbps will really be the high seller for the first 12 months anyway.”

A 12/1Mbps service on a fully scaled NBN could be up to $10 cheaper per month, Kellett said, but would still provide little incentive for further adoption from potential customers.

The provider this week signalled intentions to introduce the new offering in tandem with product refreshes, which include significantly faster upload speeds of between 8 and 40Mbps. While the 12/1Mbps may be trialled in Tasmania, Kellett said the lack of wholesale pricing in the stage one sites provided little extra value.

“There’s not a lot of motivation in bringing in a slower speed that isn’t going to affect our cost for Tasmania,” he said.

The product refreshes are part of an ongoing process to bring stage one Tasmanian plans into line with finalised wholesale pricing from NBN Co. Kellett said continued updates from Internode and other providers prior to July would likely provide higher download limits as well as faster speeds.

In excess of the 100Mbps plans currently offered by NBN providers, NBN Co is also expected to provide wholesale packages with peak downstream speeds of 250Mbps, 500Mbps and a gigabyte per second at wholesale costs of $70, $100 and $150 per month, respectively. Kellett said those plans were also under consideration but internal modem testing had yielded absolute peak speeds of 750Mbps so far.

However, the new plans will likely also involve higher prices as providers seek to extend the gap between wholesale and retail pricing.

Internode’s cheapest plan currently offered on NBN stage one sites, for example, costs $29.95 - only $2.95 more than the $27 per month the provider itself would pay NBN Co for wholesale access.

Providers are also likely to begin consideration of the extra costs involved in providing higher upload speeds and subsequently greater upload capacity.

“As soon as you move away from the 1 or 2 Mbps limit on upload speeds with ADSL, you’ve really got to start factoring in the costs of the upload traffic,” Kellett said.

“The gigs used on the upload are primarily the costs of feeding that traffic into the Telstra and Optus networks.”

He said the provider had already received requests for greater upload speeds with Circular Head Christian School in Smithton, Tasmania planning high definition video conferencing and surveillance over its existing NBN connection.

Follow James Hutchinson on Twitter: @j_hutch

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