NBN CEO Bill Morrow answers broadband questions

NBN Co is speeding up and cutting prices after backlash

THE company behind the nation's broadband network has overhauled its much maligned pricing structure in a bid to reduce congestion and improve home internet speeds for frustrated Australians.

Currently NBN Co. charges retail providers like Telstra, TPG and Aussie Broadband a fee to connect to the network and another fee for the maximum amount of total bandwidth they want available to their customers, known as the Connectivity Virtual Circuit (CVC) charge.

But beginning next year, the NBN will bundle together access and bandwidth charges for its higher speed plans under a more simple pricing structure.

The changes apply to the company's fixed line access network and will come into effect in the second quarter of 2018, but timing is subject to an ongoing consultation process with retail providers.

The company plans to introduce a new NBN 50 megabit speed tier wholesale bundle charged at $45 a month with 2Mbps of bandwidth included and a new NBN 100 megabit speed tier wholesale bundle at $65 a month with 2.5Mbps capacity included, the company said.

NBN Co. is confident the extra bandwidth capacity included in the bundles will mitigate congestion during peak times.

According to NBN Co. the bundles include nearly double the current average capacity being purchased by retailers across all NBN fixed line services today. And the included bandwidth on the new packages is just the minimum, meaning retailers can continue to purchase additional capacity as demand increases for $8 per megabit per second, per month.

The government-backed company is also offering a new voice-only and low usage access plan for those who aren't big internet users. The NBN will offer the basic bundle for a wholesale charge of $22 per month, which it says represents a potential discount of around 8 per cent on the current entry-level plan.

The new offerings are designed to entice retailers, and ultimately end-users, to buy higher speed plans as currently less than 20 per cent of users on the network have signed up to plans greater than 25Mbps.

In theory, if the new bundles are taken up it should mean slightly better value broadband packages for customers willing to fork out for top tier speeds and they should also go some way to reducing congestion issues.

However it remains to be seen if the savings are passed onto the consumer. It is up to the retail providers on how they take this to market, an NBN spokesperson said.

"Combining access and bandwidth charges into one simple price point will not only promote the take-up of plans based on higher wholesale speed tiers and position the (new) NBN 50 bundle as our flagship service," NBN boss Bill Morrow said.

"But it will also trigger the triple benefit of improved end user experiences, provide more affordable pricing options for retailers and support NBN Co's revenues in the longer term."

The controversial CVC charge has previously been criticised as being too high by the telcos and been blamed for being the source of congestion issues because ISPs were skimping on the capacity cost, meaning users were suffering through slow speeds at peak times.

NBN execs have blamed a "land grab mentality" for the prevalence of congestion on the network saying telcos have been competing on price, rather than quality as they compete to sign customers up to the NBN.

The pricing changes come after both Telstra and Optus were forced to compensate 42,000 and 8700 broadband customers respectively for over-charging them for speeds which were ultimately unattainable on the NBN.

A number of telcos have been accused of knowingly selling packages to customers on fibre-to-the-node connections that were incapable of providing the top tier speeds of 100 Mbps, or even 50 Mbps.

News Corp Australia

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