The chair of the Australian Competition and Consumer Commission, Rod Sims, has expressed alarm about the affordability of the NBN for lower income households, citing the erosion of retail service providers (RSPs) willing to offer base-level broadband products.
During an address to the CommsDay Summit in Sydney, Sims said NBN Co wholesale pricing changes are raising “a fundamental question of fairness” when it comes to broadband affordability for low-income households.
“Under the new pricing, the cost of accessing the NBN to supply a 12-megabit service has increased substantially and is now, amazingly, close to the cost to supply a 50-megabit service, with this gap likely to narrow further,” Sims said.
“Resellers were the first to exit, but the impact is becoming more evident in the offerings of established national retailers.”
For those places where the copper network is yet to be switched off, ADSL plans with a 100GB monthly quota are available for around $50, and unlimited ADSL plans cost around $60, he said.
“However, it is unlikely that similar plans will be supported on the NBN for much longer,” Sims said. “And we are now observing prices of low-speed NBN plans offered to new customers that are at least $10 per month higher than what consumers paid for equivalent plans on the ADSL network.”
Figures released by the ACCC in February, based on NBN Co-supplied data, revealed that by the end of 2018, there were 1.16 million households with 12Mbps connections: Just under a quarter of the total premises connected to the new network.
Sims said that NBN Co’s entry-level products should be “anchored” to ADSL pricing.
“NBN pricing overall is no longer being set by reference to the prices that were available on ADSL networks,” the ACCC chair said. “This was always a key requirement if the NBN was to promote competition and encourage efficient use and investment in broadband markets.”
“I acknowledge that NBN Co has recently pushed back the removal of its
dimension-based CVC discounts for two months until 31 July and this can
potentially allow NBN Co and its RSPs to consider and operationalise any
subsequent product or pricing changes,” Sims said.
“In this regard, what would help in addressing our concerns would be for NBN Co to revisit its entry-level bundle offer, or introduce a new offer, so that there is healthy competition at the $60 price point for the supply of an unlimited NBN broadband plan with busy hour speeds that compare favourably to what was available on ADSL”
After initially seeing only limited take-up of the 50Mbps wholesale tier, NBN Co has pushed for RSPs to promote it to their customers as the default option for NBN services.
In February, the Australian Communications Consumer Action Network (ACCAN) launched a campaign calling on political parties to support a subsidised broadband service for households that rely on government financial support.
The group called for a 50Mbps NBN with service with a wholesale price of $20 a month that would allow eligible households to pay around $30 per month for unlimited broadband, which ACCAN said was about half the current average cost.
“Low-income families are increasingly under financial stress, particularly when it comes to cost of communications,” ACCAN CEO Teresa Corbin said at the time. “Over 15 per cent of Australia’s lowest-income earners haven’t been able to pay their utility bills on time – it’s clearly time for change.”