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

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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