NBN Half-Year Results: Australians Are Still Choosing Price Over Speed

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While the National Broadband Network (NBN) is offering higher speeds, Australians continue to opt for the cheaper and slower plans, according to NBN Co during its half-year financial results presentation. As it renews its focus to ramp up revenue, NBN Co is trying to encourage customers to adopt higher speed tiers but it maintains that 1Gbps services are still unnecessary for the consumer space.

In NBN Co's half-year fiscal result presentation covering from June to December 2016, the company pointed to some of the financial highlights:

  • Revenue reached $403 million, nearly doubled compared to the same period in the last fiscal year. In fact, this half-yearly revenue was nearly as much as what NBN Co made in its last financial year ($421 million). However, it did suffer a net loss of $1.83 billion.
  • 3.8 million premises were NBN-ready. That has increased to 4 million as of this week, which means is one-third of NBN Co's target.
  • Average revenue per user remains steady at around $43.
  • 1.6 million active users by the end of the six-month period.

NBN Co also looked at the types of speed plans that users were buying up:

Fixed Line speed tier mix (upload/download by Mbps) As at 31 Dec 2015 As at 30 Jun 2016 As at 31 Dec 2016
12/1 33% 32% 31%
25/5 45% 49% 51%
25/10 1% 1% 1%
50/20 4% 4% 4%
100/40 18% 14% 13%

While consumers could opt for higher speed tiers, depending on what technology is used to service their area, many are sticking with the slower plans.

"There's a limited current need for higher products and lower awareness of their availability," NBN Co CEO Bill Morrow said during the presentation. "We're encouraging higher take up of higher speed plan."

NBN Co recently revamped its marketing approach for its product offerings.

When questioned about why despite some NBN areas being able to achieve 1Gbps speeds, this kind of high speed service still isn't available to consumers, Morrow noted that internet service providers (ISPs) could potentially offer it, but he speculated that there's a lack of demand for it. He said there weren't many consumer applications that demanded higher speeds than what is already offered on the NBN.

"If I had to pay for it, to go from 100Mbps to 1Gbps, why would I pay more to do it [when I don't need it]?," Morrow said. "I say that as we know things on the horizon that will increase the need for further demand. People don't feel like they need to pay to get that kind of service. Even if we offered it for free, we don't see people needing it."

Despite Morrow's claim that there isn't a real need for 1Gbps, telcos are already trialling mobile technologies that exceed the speed of current consumer NBN offerings. Late last month, Telstra and Netgear revealed a new mobile broadband router that is capable of delivering 1Gbps download and 150Mbps upload speeds over the telco's 4G LTE network. Mind you, these are theoretical speeds, but it does recognise that consumers have an interest in achieving faster broadband speeds.

According to a recent survey by Finder.com.au, a quarter of Australians are dissatisfied with their home internet speeds.

Telcos have reportedly been trialling 1Gbps services for consumers but NBN Co's connectivity virtual circuit (CVC) pricing model which charges ISPs based on capacity would make it much more expensive to provide that kind of offering unless there's a high customer uptake.

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Comments

    I keep hearing them say 'the customer doesnt need this' in terms of speed, however the fact is, if we lived by that logic, we'd never have advanced beyond 14.4k dialup modems with the ability to simply connect us to monochrome text. I can't wait for the day we have people in power who understand the *actual* need for progression of technology...

    I have a slower plan (25/5) as when I was paying for the faster plan (100/40) over the holidays I just wasn't getting the speeds I was paying for.

      Ha thats pretty much the crux of the issue. Up to 100 but if you have terribly shit copper no way you'll get that.

      I have been told that NBN nodes are pumping less power into the cabling until all users on the same main cable are migrated from ADSL to VDSL, as VDSL interferes with ADSL services. source: NBN Co. worker out the front of my house doing work.

      This means once everyone is moved off of ADSL to VDSL, speeds should improve in those situations.

      Saying that, I was on 50Mbit and getting full speeds. Gone down to 25Mbit coz I just don't use the internet as much as I thought I would. 25Mbit is fast enough

    probably because information is so scare and confusing most people barely know what speed they are opting for never mind the benefits of a higher speed plan in todays internet, especially those who spent the whole of the adsl days told they barely need 1.5Mbps and 10gb data for their internet needs.

    the other reason being the ridiculous costs and bandwidth limits of it all

    I'm paying for 100/40. Exetel gives me just enough so I can't complain. Regular speed tests shows on average 56/22. Realistically I can download at 5 to 6 Mbs on a good night.
    That was using speedtest.net (and Exetel has a related test using OOKLA as well showing the same 56/22).
    Interestingly i've started using a command line speed test interface and it is showing 39/15 for Exetel. I though this might be due to a different way of reporting. I've just used the same test for a 25/5 Telstra link. Speedtest.net show 22/4. My command line test shows the same 22/4. Makes me think my 100/40 link might be even worse than I thought...

    Last edited 09/02/17 1:03 pm

      I would say it really depends on the area and provider it seems. I am in a pretty well established FTTH area where they shut off copper and my 100/40 gets quite close most of the time.

      I had a week of sub 60mbps but it corrected itself, seemed to coincide with iinet's limitless plans coming out so it may have been some crazy traffic going through! :)

      FFTB/N? Those speeds are pretty rubbish if it's FTTP.

    Reason why is simple. The higher plan speeds are inaccesible for the majority of users as the node is not on their doorstep.

    Why pay for a 100mb service when you can only get 35mb....

    Idiots. Fix your technology, then your plans.

    People are sticking to slower plans because the faster speeds are not available to them! As most people are getting FTTN which cant get them the faster speeds, ofcourse they will only have 25Mbps connections

    I had 100/40 but was only getting 30/15.. :( And the next level down was 25/5. If they actually had the 50/20 I'd be all over it.

    Leaving Cable this month for HFC Nbn. I went for 50/20 nbn hoping it'll end up matching the speeds I'm used to now that more users will be using the line.

    My sister lives in the next street and booked the change over before I could talk her through things - they have no idea what speed tier they're on. They were just told they'd pay the same price they currently do. I have a suspicion they've unknowingly agreed to 12/1

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