NBN affordability a growing issue

8 April 2019

The cost of basic NBN plans is becoming an affordability issue for people on lower incomes, with the plans now more expensive than what most consumers pay for equivalent ADSL plans, ACCC Chair Rod Sims told the CommsDay Summit in Sydney this afternoon.

For around $50 per month a customer could, and still can, get an ADSL internet and voice plan with a 100 gigabyte (GB) quota, or pay $60 for an unlimited quota plan.

“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 ADSL plans,” ACCC Chair Rod Sims said.

The ACCC attributes this to new NBN Co wholesale pricing introduced in the past six months.

The wholesale cost of accessing the NBN to supply a basic 12-megabit service has increased substantially, and is now close to the cost of a 50 megabit service.

“There is a fundamental question of fairness here for those on low incomes,” Mr Sims said.

“We also believe NBN Co’s entry-level services should be anchored to existing ADSL pricing. This is only fair to consumers because they have no choice but to move to the NBN as their existing services are being withdrawn.

“But more importantly, consumers that already want the higher speeds that the NBN makes possible also stand to benefit from pricing that reflects the additional value.”

Mr Sims also stressed the importance of the ACCC’s current wholesale service standards inquiry, which aims to bring about improvements in the time taken by NBN Co to connect new customers and fix faults, and to keep or provide compensation for missing scheduled appointments.

“If the wholesale standards are high, retail service providers can offer strong service commitments to their customers. However, if any of these activities are not up to scratch, retailers and, more importantly, the consumer will bear the pain,” Mr Sims said.

Mr Sims also repeated the ACCC’s strongly held views that competition considerations be given more weight in the management and allocation of spectrum.

“We know that spectrum is a scarce but essential resource for operators. The amount of spectrum held by an operator is a key factor that will determine the price, quality and coverage of its services. As such, it is a critical driver of competition in downstream markets,” Mr Sims said.

Mr Sims said competition could be stimulated by taking into account all spectrum holdings of an operator, not just holdings in the relevant band, or reallocating spectrum when licences expire, rather than remaining with the provider, which locks in current market structures.

“We must all understand that in bidding for spectrum, companies will have as much incentive to buy spectrum to keep it from their competitors as they do to use it. It is completely naïve not to realise this,” Mr Sims said.

The full transcript of the speech is available at NBN affordability a growing issue.

This media release was amended on 9 April 2019.

Release number: 
47/19
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