NBN expecting 1.2m people on 50Mbps speeds by mid year

NBN has announced that it is expecting to have up to 1.6 million premises on speeds of 50Mbps or above by June thanks to discounting the wholesale pricing of higher speed tiers.
Written by Corinne Reichert, Contributor

The National Broadband Network (NBN) company has revealed that it expects to have 1.1 million additional people on its 50Mbps plan by June as a result of providing this speed for the same access pricing as its 25Mbps service at the end of last year.

According to NBN, in the two months since announcing the promotional pricing, 200,000 premises have already been moved to the 50Mbps plan, with 50,000 of these new service orders and the remaining 150,000 premises upgrading from 25Mbps.

There were only 114,000 end users on the 50Mbps speed tier prior to December, NBN said, adding that this constituted around 3 percent of all new weekly NBN service orders.

Now, about 30 percent of all new weekly NBN orders are for the 50Mbps product.

By June, around 1.6 million end users will be on plans of 50Mbps or 100Mbps, NBN said, which amounts to 35 percent of all users, up from 17 percent in December.

"NBN is very pleased with the initial take-up of the 50Mbps promotional plan by retailers, and we look forward to tens of thousands of end users receiving faster broadband services over the coming months," an NBN spokesperson told ZDNet.

"The 50Mbps promotional plan is only part of our broader campaign to focus on improving the customer experience on the NBN network as we seek to deliver the best possible experience for end users on the network."

A majority of users have been on 25Mbps plans since NBN's launch, with the Australian Competition and Consumer Commission (ACCC) again affirming that 54.3 percent were on the 25Mbps speed tier as of December 31.

As a result of NBN providing RSPs with a temporary credit for acquiring 50 percent more CVC, and pricing 50Mbps access virtual circuit (AVC) the same as 25Mbps, the ACCC last week announced that retail service providers had increased their purchase of connectivity virtual circuit (CVC) capacity, with a rise of 38 percent in the quarter to December.

According to ACCC chair Rod Sims, the average NBN CVC bought by retailers per user increased from 1.11Mbps to 1.53Mbps, with NBN contracted to supply 5,385Gbps of CVC capacity by the end of December, an increase from 3,452Gbps at the end of September.

"We are pleased to see such a large jump in the CVC acquired by retailers from NBN Co this quarter. With this level of CVC, consumers will have faster broadband speeds and hopefully less congestion during peak evening periods," Sims said.

"NBN Co's response to retailers' concerns about CVC pricing seems to have had an impact on the amount of CVC being acquired, which we believe will benefit consumers through better quality broadband."

NBN had set up 50Mbps as its flagship speed under its new wholesale pricing in December, also offering discounts on its 100Mbps speed tiers.

Under the changes, NBN's access and bandwidth charges will also be bundled together across CVC and AVC for the two top-tier plans.

The 50Mbps wholesale bundle will cost retail service providers AU$45 per month -- a 27 percent discount -- and include 2Mbps of bandwidth, while the 100Mbps wholesale bundle will be reduced by 10 percent to cost AU$65 for 2.5Mbps of included capacity.

According to NBN, the bandwidth being included amounts to "nearly double" the capacity that is currently being purchased by RSPs, with additional capacity available for AU$8 per megabit per second per month -- a 40 percent reduction on its previous pricing.

NBN CEO Bill Morrow had previously criticised retailers for cutting corners by focusing on pricing rather than speeds or quality of service after he revealed that the average bit rate per user is around 1Mbps.

RSPs including Vocus, Vodafone, MyRepublic, and Macquarie Telecom had meanwhile argued that the only reason retailers are not offering gigabit speeds to consumers is NBN's CVC pricing structure.

NBN, however, argued that falling margins and trade-offs between price and quality of broadband services are not only caused by the CVC charge, but mainly by competition.

The ACCC last week also announced that the first speed-monitoring report on fixed-line NBN services is due to be published next month, despite the boxes only just having been provided to the homes taking part.

"We'll be putting out a monitoring report by the end of March where everybody can see which providers are providing what speeds, and so that will firstly allow consumers to see what's going on," ACCC chair Rod Sims told ABC Radio National Breakfast on Friday morning.

"We have just got all the boxes for the first run of people."

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