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NBN Co Unveil Discounted High-Speed Bundles

The NBN Co has proposed three new high-speed bundles at discounted rates, whilst axing the proposed ‘Netflix tax’ after market consultation.

Customers are set to benefit from new broadband bundles costing between 32% to 68% less than current products in the same tier.

“While NBN investigated the possibility of lowering the price of video traffic by differentiating video traffic flows during the initial consultation, only two RSPs [retail service providers] supported the proposed initiative,” reads the NBN Co’s latest Wholesale Pricing 2019 Consultation report.

“NBN has therefore elected to focus on ways to meet the challenge of growing video traffic by increasing CVC inclusions and making higher speeds more affordable.”

The national broadband wholesaler said that a 250Mbps service would cost a minimum of $68 wholesale, while an “up to” 1Gbps service would require a minimum cost of $80 wholesale.

Changes will also include cheaper 25 Mbps, with slightly less bandwidth and slightly more bandwidth for 50 Mbps bundles, though at the same cost of $45 per month.

The lowest tier, ADSL-equivalent 12 Mbps bundles, are also affected by the pricing changes, making the entry-level product “more sustainable” for customers.

The changes, however, come during sharp criticism from major telcos, with Telstra chief executive Andy Penn calling for wholesale prices to be slashed by $20.

Optus expressed separate criticisms calling for NBN Co to stop charging separately for bandwidth, as data consumption rises significantly.

Currently, telcos must purchase additional bandwidth – known as the connectivity virtual circuit charge (CVC).

CVC referred to as the “on-ramp”, determines the flow of information to Australian households over the NBN network.

The wider the on-ramp, the more data that can flow through, reducing congestion and increasing overall speeds.

When speaking to the Australian Financial Review, Optus vice president of regulatory and public affairs, Andrew Sheridan said, “What we’ve always consistently argued for is a rebalancing of pricing. But we recognise you can’t just cut their revenue because then the NBN wouldn’t be able to invest”.

With data demands increasing with high definition video streaming, retailers are demanding an increase to the CVC beyond what is currently offered.

When speaking to The Australian, NBN Co’s chief customer officer for residential services, Brad Whitcomb, said CVC remains a vital piece of NBN Co’s business model.

“There still needs to be a way to allocate the very real cost of providing extra capacity on the network, and the AVC/CVC model is the fairest way to do that,” he said.

The NBN Co is also under extreme pressure to meet strict earnings targets set by the Federal government to ensure the $50 billion investment into the network is recouped.

Brad Whitcomb said in a statement, “the introduction of an affordable, new 1000/50 bundled discount is a game-changer for the industry and an exciting innovation for data-hungry customers.”

Whether or not the price changes will boost NBN earnings and calm criticisms from telcos and internet retailers remains to be seen.

 

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