NBN Co intends to make “up to” 25Mbps its new entry-level broadband tier and eliminate consumption-based variable charges on higher speed services in a “transformational” shift.
The company released a document late Wednesday containing the new pricing structure presented to a roundtable convened by the ACCC late last month.
The role, spotted by iTnews, it also contains a series of commitments that NBN Co said it would make through a revised special access commitment (SAU) that it intends to file with the ACCC next year.
One of the big changes is the restoration of the most basic NBN speed level for broadband, from a speed profile of 12/1 Mbps to 25/5 Mbps.
NBN Co said it would still allow Retail Service Providers (RSPs) to offer 12 Mbps internet service if they wanted, but would structure its wholesale rates so that a 25 Mbps service would cost roughly the same.
The ACCC has had a long-term ambition for NBN Co to create and market an entry-level product with an unlimited data quota that could retail for $ 60 a month.
NBN Co has previously opposed the idea, and it is unclear whether unlimited service would be possible under the conditions that NBN Co has set for its offering.
“NBN Co is now proposing to reposition its 25/5 Mbps service as its entry-level broadband offering, offering a voice-only service using the 12/1 Mbps speed tier on all fixed line technologies for $ 12 ; and offer 25/5 Mbps services in all access technologies (except satellite) for $ 26, with 0.1 Mbps of CVC included [connectivity virtual circuit bandwidth] capacity, “said the operator.
“To facilitate the transition from existing services to this new entry-level broadband proposition, NBN Co will retain the ability of RSPs to use 12/1 Mbps services for broadband delivery, and non-voice use in The 12/1 Mbps service will attract a similar price concept as the entry-level 25/5 Mbps service.
“NBN Co’s proposed price of 25/5 Mbps will allow RSPs to purchase entry-level services with 0.1 Mbps of inclusions plus 1.1 Mbps of surplus from CVC for $ 34.80, which should allow supply of corresponding retail products for $ 60 ”.
Repositioning 25Mbps as the most basic service is likely to bring scrutiny closer to the number of installations that still cannot reach that speed, either at all or with great consistency.
Full price construction
Confirmation of previous reports by iTnews, NBN Co intends to charge a fixed wholesale price per month on services of 100 Mbps and above, while retaining the existing pricing model, comprising fixed and variable components, for lower-tier plans.
Lower tier plans may be priced at a flat rate at an unspecified point later.
The maximum price for wholesale services is on the lower end of what was first proposed in June.
Top-tier services, those with flat-rate prices, would incur annual increases, which NBN Co said it wants to set at inflation plus three percent.
With inflation currently at three percent, higher-tier services would see annual price increases of up to six percent, though it’s debatable whether NBN Co could do that without affecting consumers’ willingness to pay for services.
Under the new proposal:
- The 100 Mbps services, which NBN Co brands as ‘Home Fast’, would cost $ 60 a month in bulk, compared to a previously announced price range of $ 60 to $ 63 a month;
- 250Mbps (‘Home Superfast’) would cost RSPd $ 70 wholesale per month, compared to a range of $ 70- $ 76, and;
- Even gigabit * (‘Home Ultrafast’) would cost $ 80 wholesale per month, compared to a range of $ 82-100.
These wholesale prices are before the annual increases incurred.
However, NBN Co expressed significant concerns about what the price could affect its revenue.
The language of the report seems to suggest that the company would like the opportunity to test the prices in some way before embedding them in SAU’s long-term commitment.
“Typically, NBN Co would introduce and test the demand and revenue impacts of such a transformative change through the introduction of discounts, such as [we] it did when it successfully introduced bundled pricing, ”the company said.
“However, NBN Co recognizes the desire expressed by RSPs, including in working group discussions, for greater certainty in NBN Co’s wholesale prices and, accordingly, NBN Co proposes to commit to introducing these offerings in the SAU.
“The impact of NBN Co committing to such a fundamental change in its prices in the SAU before having proven that prices under market conditions is that NBN Co would risk entrenching, in its long-term regulatory framework, Prices that are set at inefficient levels, by not appropriately allocating network costs to users who obtain the greatest value from it.
“This would not benefit end users in the long term.”
NBN Co appears to be working on the assumption that it will not be able to ‘road test’ maximum prices before incorporating them into long-term regulated conditions and may therefore be trying to cushion that impact through annual price increases. in services of 100 Mbps and higher.
“For [flat price] offers, nbn proposes an annual price control of CPI + three percent ”, he said, a construction that previously called ‘CPI + X’.
“NBN Co considers that an X of three percent for the first regulatory cycle is appropriate for [flat price]-Only offers as it provides NBN Co with an adequate degree of flexibility to address the demand side risk faced by NBN Co in relation to these offers, especially given their novelty and unknown impact on demand.
“It also provides NBN Co with greater ability to continue investing in its network to maintain and improve quality of service.”
A separate summary report released by the ACCC indicated that “there appeared to be support from the working groups to eliminate volumetric charges for higher speed TC-4 (best effort broadband) products from the beginning of the next regulatory period with potential for other speed levels then move to [flat-rate] prices “.
“However, no agreement was reached on where the dividing line should be drawn at such speed levels, or the level or shape that the remaining volumetric CVC loads should take,” the ACCC noted.