Consulting industry to bring new nbn benefits to more
That’s why over the coming months, NBN Co will conduct an industry-wide consultation into how our future pricing and discount constructs may evolve. This is designed to pave the way to better broadband speeds for customers, while helping to ensure retail providers and nbn can remain profitable to enable a thriving telco industry and reinvestment in this critical infrastructure.
The Wholesale Pricing Review Consultation Paper, which will go out to more than 50 Retail Service Providers (RSPs) and special interest groups today, is the most significant industry consultation we have undertaken in two years.
Our last industry consultation in 2017, led to the introduction of our Pricing Evolution program, which included the successful Focus on 50 campaign and the Bundles Discount, both of which have helped improve the experiences of customers who connect to the nbn™ access network.
Those initiatives are the reason why 63 per cent of customers connected to the nbn™ network today are on speed tiers of 50 megabits per second or higher, and why the average network bandwidth congestion across the network (excluding Sky Muster™ satellite) reduced from almost five hours in 2017 to 31 minutes per week per customer in May 2019.
Our Bundled Discounts for the first time packaged both the access and bandwidth charges for higher speed plans under a simple discount structure and have also had a significant impact on the retail broadband market.
These initiatives have served customers well, but nbn is now at a new juncture and ready for the next phase of growth and market development. With more than 80 per cent of the network rollout complete, take-up has achieved critical mass, which has fundamentally shifted market dynamics and led to customer demand for more data and faster speeds.
With that in mind, we believe the time is right to engage in a new conversation with the industry and special interest groups such as the Australian Communications Consumer Action Network (ACCAN), about developing new price and discount options so that Australians continue to have access to affordable, resilient and reliable broadband services.
The Wholesale Pricing Review Consultation Paper we have released today is seeking industry feedback on five key areas: lifting take-up including underserved consumer segments; promoting higher speeds; improving support for RSPs in the face of increasing demand for broadband; creating a regular cadence for future pricing and discount consultations; and making it simpler and easier for RSPs to do business with NBN Co.
As part of our review, we will be seeking feedback on the pricing and discount constructs across our business. We want to provide RSPs with simple wholesale discount bundles, which will offer them greater flexibility to construct differentiated retail products to better service their customers’ needs.
At its core, this consultation paper centres on three important components:
1. Continue to increase the take-up of nbn™ services and address underserved consumer segments in the community.
Research commissioned by nbn indicates that older Australians, low-income households, renters and single person households are connected to the nbn™ network less regularly than other segments. This means these segments could be missing out on the social, financial, health and educational benefits that access to fast broadband promises.
I am confident that through this consultation process, we can meet this important challenge together and come up with new ways to connect these under-served segments.
2. Improve the customer experience.
We want to build on the success of the Focus on 50 and Bundle Discounts program and work with the industry to continue the take-up of higher speed broadband plans and to help customers get the most out of their broadband connections.
3. Ensure that nbn has a sustainable business model.
It’s important we strike the right balance between helping RSPs develop affordable solutions for Australians, giving RSPs a platform where they can compete, while also allowing nbn to generate a reasonable return so we can invest in the network to meet the future broadband needs of residential and business customers.
A sustainable business model will allow nbn to continue to invest in upgrading and maintaining our network, create new wholesale products and develop new technologies, which is critical if we want to fully unleash the social and economic benefits of the network for our nation.
As part of our ongoing commitment to provide greater certainty and clarity to the industry, NBN Co today also announced a number of wholesale changes to existing discounts.
nbn is increasing the wholesale Connectivity Virtual Circuit (CVC) or capacity inclusion for the Bundle 100 and above Discounts by 500Kbps to 3Mbps. This extra capacity will help RSPs deliver a good customer experience while the consultation is underway. The effective cost of nbn’s Wholesale Bundle 100 Discount will remain unchanged at $65 and the CVC inclusion change will be effective from September 2019.
We are also extending the existing Dimension-Based Discounts for RSPs until 30 June 2020 to provide greater cost-certainty to the industry, as we work through the consultation process and develop longer term solutions for customers, including those with lower usage and lower speed requirements.
We believe these changes send a clear signal to the market, as they show we are listening to the industry and taking decisive action where needed.
I encourage the industry to consider and respond to the Wholesale Pricing Review Consultation Paper. We will take into account all feedback to release a second consultation paper with more specific proposals for further consultation, before releasing a paper later this year with our final response.