Wholesale prices on the National Broadband Network are being cut in a bid to encourage Australians to sign up for faster broadband plans. Whether that approach works will depend on internet service providers getting on board and offering cheaper packages. Here's what we know so far.
NBN Co has revealed it is working on new "confidential" pricing models with internet and phone providers in an attempt to improve the network's bang-for-buck. By the end of the year, a new wholesale access model is expected to be announced that has the potential to end the "tax on megabits". Here's what you need to know.
Most NBN customers are still signing up for slower plans, with just 16 per cent of current NBN users taking up the faster 50/20 or 100/40 options.
This week NBN Co announced that it was cutting the wholesale price of the 50/20 service to match what it charges for 25/5, which is currently the most popular speed choice.
The thinking is that this will lead providers to cut prices on 50/20 plans, making them more attractive to consumers and potentially driving many of them to switch up to the faster speed.
The pricing move comes amidst a rising tide of complaints over the NBN not delivering promised speeds, which has led both Telstra and Optus to offer refunds to customers who couldn't get the speeds they were paying for.
TPG has already reflected the wholesale pricing change on its plans, offering an unlimited download plan with 50/20 speeds for $69.99 a month. Previously it charged that much for the 25/5 option. It has also cut the price of its 100/40 plan by $10.
Whether that approach will be taken by the two biggest telcos, Optus and Telstra, remains to be seen. Both encourage customers to sign up for bundles, which makes comparing prices directly more difficult.
Providers currently pay $24 a month wholesale to NBN for a basic 12/1 service, but analysis by finder.com.au shows that customers will usually have to pay double that or more to get a service with a decent data allowance, even at that low speed.
The wholesale price reduction is a temporary measure ahead of bigger changes planned for 2018, which will see NBN services with guaranteed throughput introduced.
In late 2018, NBN is also planning to introduce a new entry-level speed option, aimed at customers who only want a landline-like phone service. Those plans will include only the basic slow 12/1 service, along with just enough capacity to provide a voice-over-internet service to replace current landline phones.
However, regional Australians who will be connected via the Sky Muster satellite won't be offered that option.
With a wholesale price of $22, it's likely that customers on the new entry-level service will still be paying $30 or more a month. If all they want is a telephone service, a pay-as- you-go mobile plan is likely to be a better deal.