The wholesale cost of the NBN’s 50Mbps speed tier looks likely to increase by AU$5 a month, after Australia’s consumer watchdog said the price hike is “reasonable” in order to help NBN Co recuperate its costs.
The Australian Competition and Consumer Commission (ACCC) outlined its view on the NBN 50 price increase in a draft decision, which was presented in response to NBN Co’s proposed price revision. NBN Co wants to revise its pricing structure so it reflects current market conditions and usage trends, and allows it to recoup its costs more effectively.
While the ACCC ultimately rejected NBN Co’s proposed changes to the Special Access Undertaking (SAU) based on other factors, the regulator didn’t take issue with NBN Co’s plan to increase the wholesale cost of the 50Mbps tier specifically.
“In our view it would be better to commence an orderly transition to efficient pricing now, and that this occurs gradually over time so that households and businesses are protected from sharper price increases in later years,” the ACCC’s draft decision read.
What the draft decision means for you
The competition regulator’s draft decision indicates that internet providers may need to pay an extra AU$5 a month for the wholesale price of 50Mbps connections, which is an extra cost that will undoubtedly be passed on to consumers.
We’ve examined the NBN 50 plans of 23 internet providers, and found that the average cost of a 50Mbps plan is just over AU$75 a month. If NBN Co’s proposed changes to the SAU gets approved by the ACCC, the average cost could increase to more than AU$80 a month.
Below, we have a live-updated widget showing some of the cheapest NBN 50 plans via WhistleOut.
If the price of the NBN 50 tier goes up, the gap between it and the NBN 100 tier could narrow considerably. Looking at the price of NBN 100 plans from 22 providers, the average monthly cost currently sits at around AU$92.
NBN 100 plans can offer double the speed of NBN 50 plans – 100Mbps vs 50Mbps – and the ACCC has expressed some concern that an increased expense to NBN 50 plans could make them less competitive, and “converge with the charge for the 100/20Mbps wholesale offer.”
According to the draft decision, part of the reason why the ACCC doesn’t take issue with the proposed price increase to the 50Mbps tier is because NBN Co has also proposed decreasing the cost of plans that are 100Mbps or faster by AU$3 to AU$10 per month.
Here’s a widget showing some of the most affordable NBN 100 plans currently available.
Why the cost of NBN 100 plans could be decreasing
NBN Co wants the fastest NBN plans to get cheaper so that speed-hungry users on the 50Mbps tier are encouraged to take up faster 100Mbps plans. As NBN Co notes in its response to issues raised in the ACCC’s consultation paper, “a small proportion of heavy-usage end-users consume a disproportionate amount of bandwidth”.
However, this would put the onus on internet providers to upsell its heavy 50Mbps users to the 100Mbps speed tier. NBN Co’s response said that providers “only need to be successful in upselling a small proportion of high-usage end-users to achieve significant changes to their average usage… and hence experience meaningful cost savings”.
That should be an attractive proposition to NBN providers. If they’re successful in moving their heavy-use 50Mbps users up to a 100Mbps plan, they’ll not only gain more higher-paying customers, but because wholesale NBN 100 plans come with more bandwidth capacity, they’ll have more speed to help keep the network healthy… and presumably, customers happy too.