ACCC: NBN customers are paying more but getting less

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The Australian Competition and Consumer Commission (ACCC) has taken aim at NBN pricing, claiming that affordability has become a serious barrier to entry for Australian broadband customers.

ACCC Chair Rod Sims discussed the issues with current NBN pricing at yesterday’s CommSummit event in Sydney. During his speech, Mr Sims addressed changes to wholesale NBN pricing on lower speed tiers, as well as the ACCC’s NBN wholesale service standards inquiry.

A key factor affecting NBN access is the current price disparity between entry-level NBN plans, and existing ADSL broadband – an issue that the ACCC has labelled unfair to low-income consumers.

ACCC to NBN: drop entry level pricing

After recent changes to NBN Co’s wholesale pricing – designed to make mid and top-speed plans more affordable – internet service providers have been forced to pay more to supply basic NBN 12 plans to customers. The increased strain on providers has led to several telcos opting to scrap NBN 12 plans completely, with Dodo, iPrimus, and Exetel all removing their respective NBN 12 offerings within the last month.

Although other companies continue to provide basic NBN, with prices ranging from $50-$70 per month, the lack of support for NBN 12 from major providers means many customers are forced on to more expensive plans, particularly if unlimited data is required. As equivalent ADSL broadband plans are priced at around $50-$60 per month, many customers face a monthly price increase of $10 or more when switching to an NBN plan.

“Under the new pricing, the cost of accessing the NBN to supply a 12-megabit service has increased substantially and is now, amazingly, close to the cost to supply a 50 megabit service.” Mr Sims said. “We were never meant to get to a situation where some consumers, in switching to the NBN, will be left worse off by paying more, or getting less.”

Indeed, many major service providers – such as Telstra and Optus – have abandoned low-cost and low-speed options completely. Currently, Optus’ cheapest advertised unlimited NBN plan is priced at $70 per month on the NBN 50 speed tier, with additional set-up costs for customers who forgo a two-year contract.

Telstra’s entry-level NBN is also priced at $70, but includes 100GB of monthly data on the slower NBN 25 tier. To buy unlimited data, you’ll pay a minimum of $90 per month with Telstra, and be bumped to NBN 50 speeds.

 

 

To combat the affordability problem, the ACCC has proposed that the cost of entry-level NBN 12 plans should align with existing ADSL pricing. As broadband customers will eventually be forced to move to the NBN (due to the future shutdown of all existing ADSL services), this ensures that Australians aren’t worse off financially after making the switch.

A lowered entry price for basic speeds also means that faster and more expensive plans – on NBN 25, NBN 50, and NBN 100 wholesale tiers – will see their value more accurately reflected in their higher monthly pricing. Creating a wider gap between standard and premium NBN speeds will also, according to the ACCC, help to ensure that NBN Co and providers continue to invest in higher speed services.

The ACCC states that around one in eight fixed-line NBN connections fails to achieve its expected speeds (and up to one in four fibre-to-the-node connections, on NBN 50 plans). Giving unsatisfied customers a cheaper option, with peak hour speeds that are equal to or faster than current ADSL connections, may help address the speed and pricing issues faced by so many new NBN subscribers.

Wholesale service standards: customer service matters

Mr Sims also discussed the ACCC’s inquiry into the NBN wholesale service standards. The inquiry sees the ACCC look at aspects of customer service from both NBN Co and wholesale broadband providers, including connection times, the time it takes to resolve faults and issues, and the ability to keep scheduled appointments with customers.

During the CommSummit presentation, Mr Sims outlined the experiences of an unnamed ACCC staff member, who endured three missed NBN Co appointments before finally getting connected. Although NBN Co claims that missed appointments have dropped to around 5%, stories like this are not uncommon, and the ACCC has pushed NBN Co to meet its commitments to customers.

NBN Co will now pay a rebate to internet service providers if it misses scheduled appointments, both for new connections and fault repairs. The ACCC is also looking to add further incentives and obligations to improve customer satisfaction, such as priority assistance services and a customer service guarantee.

How to find the right NBN plan

Comparing broadband plans before you commit can help you suss out the best deals and cheapest prices. But one of the biggest factors in picking the right NBN plan is choosing the correct speed tier for your needs.

Recent research from Canstar Blue has shown that not every NBN user is aware of their current plan speed, which can cause issues if your connection isn’t fast enough to handle your household usage.

A general guide to the four NBN speeds is below.

Basic Evening Speed (NBN 12)

  • Downloads of up to 12Mbps/uploads of up to 1Mbps
  • Good for small households and light users

Standard Evening Speed (NBN 25)

  • Downloads of up to 25Mbps/uploads of up to 5Mbps
  • Good for streaming and households of 2-3 people

Standard Plus Evening Speed (NBN 50)

  • Downloads of up to 50Mbps/uploads of up to 20Mbps
  • Good for HD streaming, heavier use and online gaming

Premium Evening Speed (NBN 100)

  • Downloads of up to 100Mbps/uploads of up to 40Mbps
  • Good for ultra-HD streaming and gaming, big households, and data-intensive use

When comparing NBN options, it’s important to look not just at the potential download speeds above, but also each telco’s listed Typical Evening Speed for plan tiers. This is the average speed users on a plan will experience during peak periods (between 7pm – 11pm), and is generally the most accurate indicator of how fast your plan will actually be.

If you’re torn between two speed tiers, it may be safest to pick the faster option (assuming it fits within your budget). With price differences between speeds still averaging at around $10 each month (depending on your telco), making the decision to upgrade may pay off down the line – resulting in an overall better performance from your NBN plan.

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