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NBN finally has a 50Mbps or quicker majority network

People will move to higher speeds on the National Broadband Network if its prices are cut.
Written by Chris Duckett, Contributor

The company responsible for deploying the National Broadband Network (NBN) across Australia can now lay claim to having a network where the majority of its users are on plans of 50Mbps or faster download speeds, according to the latest quarterly Wholesale Market Indicators Report from the Australian Competition and Consumer Commission (ACCC).

As of the end of December 2018, almost 2.3 million were on 50Mbps tier plans, and another near 400,000 were on plans of 100Mbps or faster.

However, before the champagne corks start flying around NBN offices, it is worth noting that Australia still has 1 million users on 12Mbps connections, and almost another million on 25Mbps. Not to mention that all 93,000 users of the NBN satellite service are incapable of 50Mbps speeds, and arguably have the most need for the touted benefits of high-definition telehealth, video conferencing, and distance education that have long been promised.

Broken down by technology type, fibre-to-the-curb networks have the highest percentage of users on connections of 50Mbps or quicker, with 73 percent; the pilloried fibre-to-the-node networks are next, on 58 percent; this is followed by fibre-to-the-premises which is a percentage point behind; and Hybrid Fibre Co-Axial (HFC) and fibre-to-the-building, both sitting around the 55.5 percent mark. Fixed-wireless has half its users on 12Mbps or 25Mbps plans, and the other half on its 25-50Mbps service.

(Image: ACCC)

The shift in users to 50Mbps is a result of NBN's pricing discounts, which finished at the end of October, and new wholesale bundles for 50Mbps and 100Mbps speeds, the ACCC said.

"It's good to see that retail services providers have been able to offer higher speed plans at more affordable prices -- thereby giving many consumers more choice," ACCC Chair Rod Sims said.

The ACCC noted the amount of bandwidth purchased by retailers, as measured by the total Connectivity Virtual Circuit charge the NBN imposes, dropped from 1.71Mbps to 1.65Mbps over the quarter to December 31.

Chief of Aussie Broadband Phillip Britt said on Monday that CVC costs are holding back his company from offering unlimited data on plans faster than 100Mbps.

"The CVC pricing construct is the primary limiter here, we've only got 2.5Mbps of CVC allocated under the bundled model and someone on an unlimited plan on those higher tiers would have the potential to really cause some damage," Britt said during a Reddit AMA session.

Britt said the 100Mbps price will come down, but it will need a write-down of the NBN for the price pressure to be passed onto consumers.

"They can't hold onto the $51 [average revenue per user] amounts they are trying to achieve, because the mobile guys will wipe the floor with them," Britt said.

"As to when it will occur, that's hard to predict. They have released a short term promotion around the 100/40Mbps services currently but it has some conditions around it that requires a customer to stay with that service provider for X period of time, so its risky to implement."

Aussie Broadband already has 26 percent of its users on the 100Mbps tier, Britt said, but added that average users find the 50Mbps price point as the sweet spot.

Giving evidence to the Joint Standing Committee looking into the business case for the NBN on Monday, NBN CEO Stephen Rue maintained that there are no impairment issues that would see the company needing to write down the value of the company, and that those calling for such action are just after a wholesale price cut.

"When people say there should be a write-down, I don't think that is what they are really calling for. Essentially, they are calling for the wholesale price to fall dramatically," Rue said.

"Calls for a large wholesale price cut puts at risk the long-term viability of the company ... without that, I truly believe you put at risk the digital future of the country, and all the benefits that flow."

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