The NBN has never been popular with everyday Australians because many have found it unreliable and overpriced. What's more surprising is that Australia's biggest telco, Telstra, also isn't too fond of the network and has announced it's going to try and make pricing better for everyone.
Earlier this month, it was revealed NBN Co had started initial talks with ISPs about how they could chuck an extra fee on video streaming, according to Commsday and iTNews.
In an official Telstra blog post, Telstra CEO Andrew Penn pointed to a study that found Australia was the second-most expensive country in the world when it came to wholesale broadband pricing for the 50 and 100-megabit service. For the 25-megabit service, Australia took the crown.
"Under the current nbn pricing these objectives, along with the overall sustainability of the industry, are increasingly at risk," Penn wrote.
"Wholesale broadband prices have more than doubled under the nbn and are set to go even higher. The consequence of this is that it is unprofitable for retail service providers to resell nbn at the current retail prices."
Australia's monthly payment for a 100-megabit plan was $65, according to the study conducted by Link Economics. This is about $30 more than the FTTN benchmark for other countries. These figures had been adjusted with Purchasing Power Parity to account for currency exchanges.
But Telstra has a plan
In order to encourage take up and sustainability of the NBN network, Telstra is proposing NBN Co lower the wholesale costs in order to give retailers better margins without relaying the costs back to the customer, us.
"Ultimately... fewer customers will connect to the nbn and an increasing number of customers will switch away – undermining the potential social and economic benefits the investment in the network was designed to deliver," Penn wrote in the post.
Telstra recommended the following to alleviate the situation:
- Removal of the separate volume-based pricing charge (CVC).
- Simpler single-point pricing for the standard nbn speed tiers (50/20 and 100/40) with prices reduced by around $20.
- Lowering of the price for superfast services (250 Mbit and up) to under $100.
- Introduction of a $10 per month voice-only service.
- Introduction of a wholesale price discount for targeted vulnerable and low-income customers in need.
They argue with the way the NBN Co is going, once migration has completed, prices will only become more expensive for retailers and ultimately, end-user customers.
Wait, Telstra wants to lower my prices?
Yes, it's a strange set of circumstances but ultimately, lower wholesale prices from NBN and bigger uptake from the population equals better profits for Telstra. Given their hold over the broadband market, it affects its bottom line the most.
Telstra is also proposing that superfast services (i.e. 250-megabit, 500-megabit and one-gigabit plans) be brought under $100 per month, which seems ambitious in the Australian market, but a much-needed relief for consumers and businesses requiring faster internet speeds more in line with the global average.
Of course, it's all dependent on whether NBN Co agree with and given the cost blowout of the entire project, it seems unlikely they'll want to pivot too much on their revenue streams but it may not be up to them in the end. In July, it was revealed NBN Co had floated the idea of charging more for video streaming services, suggesting they're looking to diversify their offerings. The intense criticism NBN Co received after it was leaked to the public, however, means its viability might be low.
In the meantime, if you're looking for a solid NBN 50 deal, check out some of the cheapest alternatives on the market right now in our interactive table below.
Why are NBN plans capped at 100Mbps? Well, I guess the simple answer is that they actually aren’t.
It is possible today in some places in Australia to buy plans that are 150, 250 and even higher. But there are a couple of reasons why most ISPs don’t offer plans higher than 100Mbps, and why most customers aren’t buying them when they do.