Aussie Broadband forced to shelve lower-priced services after NBN pricing changes

The end of NBN's temporary discount on 50Mbps services means smaller retailers may have to stop offering lower-end products in order to make a profit, according to Aussie Broadband.
Written by Corinne Reichert, Contributor

The end of the National Broadband Network (NBN) wholesale pricing discount means smaller retail service providers will have to choose between offering high- or low-speed tiers, as they won't be able to do both, Aussie Broadband has said.

"Aussie has chosen to play in the higher end of the market using the new bundled offering exclusively, as it provides sufficient CVC capacity to ensure a good experience for customers," Aussie Broadband MD Phillip Britt told ZDNet.

"In our view, it will not be possible for providers offering a service under AU$55 a month floor price and an unlimited offering under AU$69 using the bundles.

"Providers below this price point will most likely be short-changing their customers on the CVC bandwidth provisioned."

As a result of NBN's Focus on 50 wholesale pricing discount ending on October 31, Aussie Broadband has been forced to cease offering some of its lower-end plans, Britt told ZDNet, which will result in a price increase for 9 percent -- or 7,528 -- of the provider's customers.

"From the 1st November 2018, any NBN plan that is billing under AU$55 per month [will] no longer be available. This is generally customers on a 12/1 or 25/5 service with less than 100G included data," Aussie Broadband added in a blog post.

NBN in May launched its new wholesale pricing bundles after several months of consulting with industry; according to Aussie Broadband, NBN's bundles have a bottom price of AU$49.50, making it "not possible" to offer services priced lower than AU$55 while being able to make a profit.

The retailer will therefore be moving affected residential customers to its 25/5Mbps plan with 100GB of data, available for AU$55 per month, while affected small business customers are moved to the AU$65 25/5Mbps plan with 100GB of data.

And while NBN is offering its old pricing structure, it requires access to multiple CVCs -- which Aussie Broadband argued is not possible for smaller providers.

NBN had on Thursday cited its temporary Focus on 50 wholesale plans as the reason why over 2.1 million premises are now on higher speed tiers -- but said its dropping network congestion would "fluctuate" as its new pricing bundles take effect.

"We have put in place support and resources to help internet providers adjust to the new billing solutions and changes to IT systems. These aren't things that affect consumers directly, but they need to be carefully managed with the industry to minimise disruption," NBN said in a blog post.

"Our team has built bulk migration tools to help internet providers shift large volumes of customers to the new bundle discounts. A dedicated team will be on standby to provide support should internet providers need it.

"We will also continue to monitor congestion levels."

The Australian Competition and Consumer Commission (ACCC) had previously forced Telstra, Optus, TPG, iiNet, Internode, Dodo, iPrimus, and Commander to compensate tens of thousands of customers for not providing them with the NBN speeds they were paying for.

By contrast, Aussie Broadband, which suffered an NBN outage over the weekend, in July took home the highest scores across the ACCC's second NBN speed-monitoring report.

According to the ACCC, Aussie Broadband delivered 89.1 percent of its maximum plan speeds overall and 88.3 percent during busy hours for downloads. It likewise scored highest on average upload speeds, providing 89.4 percent of its maximum plan speeds overall and 89.1 percent during busy hours.

Upload speeds during very busy hours remained fairly high, with Aussie Broadband providing 82.4 percent of maximum plan speeds.

Fixed-Wireless Plus

NBN on Thursday added that it is working on a "Fixed Wireless Plus" product, after it ripped up plans to offer 100/40Mbps services and told Senate Estimates in June about plans to throttle "extreme" fixed-wireless users.

New NBN CEO Stephen Rue in August revealed NBN's new wholesale fixed-wireless pricing -- AU$45 for existing customers and AU$65 for new customers on the 50/20Mbps speed tier -- during a joint standing committee hearing; however, after backlash the company retreated.

As of June 30, NBN had 2 million active end users on its fibre-to-the-node (FttN) network, 1.2 million on fibre to the premises (FttP), 414,703 on hybrid fibre-coaxial (HFC), 240,084 on fixed-wireless, and 90,327 on satellite.

Across the new fibre-to-the-curb (FttC) network, which will eventually cover 1.5 million premises across the nation, NBN now has 174,161 premises ready for service, and 75,387 ready to connect.

In June, the ACCC said it would need an additional AU$6 million to extend its speed-monitoring program to fixed-wireless services.

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