The National Broadband Network (NBN) has no shortage of detractors. This week even Telstra joined the ranks of those complaining about the cost of a service that hasn’t delivered on many of its promises – from speeds to roll-out timelines.
CEO Andrew Penn recently wrote a blog post that notes that Australia has the second-highest wholesale broadband prices in the world for 50Mbit and 100Mbit services.
These figures have come from a study by Link Economics that was commissioned by Telstra.
“Under the current NBN pricing these objectives, along with the overall sustainability of the industry, are increasingly at risk,” said Penn.
“Wholesale broadband prices have more than doubled under the NBN and are set to go even higher. The consequence of this is that it is unprofitable for retail service providers to resell NBN at the current retail prices.”
According to Finder, the majority of active NBN connection are through Telstra, so its criticism of the current pricing structure isn’t particularly surprising.
While it’s nice that the telco is voicing concerns over affordable plans for consumers, it would be prudent to remember that high prices also means profit loss for NBN providers such as themselves.
Penn acknowledges this in the post and also states that the industry will be unsustainable if the the wholesale prices net zero margins for retail providers in the downstream.
“It will result in higher retail prices, reduced competition and retail providers looking for ways to bypass the NBN altogether – which is bad for customers and bad for the industry. This ultimately means fewer customers will connect to the NBN and an increasing number of customers will switch away – undermining the potential social and economic benefits the investment in the network was designed to deliver,” said Penn.
Regardless of the company’s motivation for speaking out, Telstra has recommended five changes to NBN’s pricing. These points will be included in the telco’s submission to the NBN’s wholesale pricing review.
According to ITNews, Aussie Broadband is also joining the call for a cheaper option for disadvantaged users, challenging NBN to halve some pricing.
“We believe a large number of these customers use mobile services, which are cheaper than most current NBN product offerings but offer significantly less data,” Aussie Broadband said.
“If NBN Co were to offer a half-price bundle for disadvantaged groups, therefore allowing RSPs [retail service providers] to sell the product at half-price, a consumer would likely be able to access an unlimited data NBN50 product for $35-$39 per month.”
ITNews also reported that Aussie Broadband also agreed with Telstra regarding the necessity to lower the price of plans that offer speeds over 100Mpbs.
“Currently these products are priced at a significant premium and have a limited data allowance due to current CVC [connectivity virtual circuit] constraints,” Aussie Broadband said.
“However if created into a high-bandwidth bundle with a larger CVC allowance, these products would have much broader appeal.”
Arguments around whether average Australians need speeds this high continue to flare, despite the fact that people’s connectivity needs and habits have drastically changed since the NBN was first conceived in 2009.
Considering that the prices are so high, it’s unsurprising that uptake of these top-tier options is low compared to cheaper, slower broadband plans.
It’s also important to remember that NBN Co itself has been tossing around the concept of charging consumers extra for streaming video.
Not only does this negate the idea of net neutrality, where one packet of data shouldn’t be prioritised over another, but also the antiquated argument that Australians don’t require high speed internet for their everyday lives.
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