Home » NBN Co plan to hike internet prices stirs controversy

NBN Co plan to hike internet prices stirs controversy

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Australians will face higher internet charges over the next decade, with plans to raise broadband prices to recoup huge sums. Rapid increase in NBN costsMajor retailers and experts warn.

Taxpayer-owned NBNCo submitted a change in Internet prices to competition regulators this week for approval. Taxpayers bid to recover billions of dollars in an explosion of funding costs..

However, NBN Co’s proposal, which is projected to double the price of the lowest wholesale NBN program by 2033, has been criticized by competition regulators, major telcos and experts.

Retailers warn that households will pay more for the Internet if NBN CO implements the plan, but the Australian Competition & Consumer Commission has stated that the number of “reasonably priced” products across the market. I’m afraid to reduce.

Experts said the controversy emphasized a deeper question about the subsequent direction of NBN. Rapid increase in costs over 10 yearsInsists that the next Labor government will intervene and address urgent issues.

It all comes as new data shows More and more Australians are upset About the quality of internet services at current prices.

Higher NBN price

NBN Co said this week that it “wants to significantly evolve its pricing structure” to ensure that it receives sufficient revenue to recover the costs of building Australian broadband networks.

Approval from the ACCC is required on Monday to implement the plan. Officially requested a major change in the way Internet services are provided..

This is a complicated plan, but for some professionals and major retailers, pricing is a concern. In particular, over 80% of Australians are bidding to raise wholesale costs for plans for speeds up to 50 megabits per second (mbps). use.

Under the new structure, ACCC predicts that the nominal price of the 25 mbps plan will double over the next 10 years, with wholesale prices rising from about $ 40 a month today to $ 104 a month by 2040. ..

The wholesale price of 50 mbps will rise from about $ 60 per month to over $ 100.

These higher prices are achieved by changing the planning structure.

Plans under 50 mbps are bundled within bandwidth tolerances and retailers are charged monthly for exceeding the $ 8 limit per mbps.

Bundles are reviewed twice a year to see if they need to contain more data. NBN predicts that data demand will increase by 13% each year over the next 18 years.

However, plans with speeds above 100 mbps will work with different models, but the data limits will be removed and a flat rate will increase each year, which is partially determined by inflation.

Flat rates rise at inflation (CPI) plus 3% for the first few years, then in step with inflation or up 3% each year.

“Excessively expensive”: Price plan was blamed

According to the ACCC, in the model, plans with speeds up to 50 mbps will gradually increase in cost over the next 10 years, so in reality they will converge on the price of a much faster 100 mbps plan.

This is because slower plans come at an additional cost as data usage increases. The ACCC warns that demand may increase much faster than NBNCo expects.

Source: ACCC (click to enlarge).

The ACCC has raised a series of other issues regarding the NBN program.

For example, it was suggested that the $ 8 overage would appear to outweigh the cost of providing additional data to retailers such as Telstra, Optus, and TPG.

“These dynamics show that the market is expected to shrink in affordable access products,” the ACCC warned.

“It can in turn damage the level of retail competition and result in supplying retail products to the market at higher prices and speeds that exceed the needs of end customers.”

Optus, TPG and Telstra all say they are afraid that the proposed model will bring high retail prices to Australians and will pass on the increase to wholesale prices.

“Retailers like Optus have no choice but to pass on the proposed cost increase to their customers,” Optus spokeswoman Andrew Sheridan said in a statement.

Mark Gregory, an associate professor at RMIT University, said retailers are right to emphasize “the NBNCo’s recommended overly high rates for substandard product offerings.”

The government called for action

NBN Co claims that the new model will help pay for debt incurred while building the network, but proposes a “price cap” to ensure that revenue does not exceed costs.

However, the ACCC is afraid that safeguards will fail because NBN Co cannot make enough money to recover its costs in the short term.

Experts said the controversy reflected the difficulties NBN faced in trying to recover from the huge cost explosion that occurred during the construction of a national Internet network for more than a decade.

Telecommunications consultant Paul Budde said the only way to enable NBN to stay affordable under cost recovery obligations is if the new Labor government tries to write down the value of infrastructure. ..

This reduces how much NBN is worth on paper and makes NBNCo much less aggressive with the proposed pricing model.

“The company was backed by a previous government that wanted to get back money from its investment in NBN,” Budde said. TND.

“Broadband users are basically paying the price of bad policies because the cost of building NBNs has increased significantly.”

Associate Professor Gregory said the government may also need to update its statement of expectations for taxpayer-owned companies.

“At NBNCo, we need to make a big difference,” he said.

The ACCC will accept public submissions of the proposal until July 8.

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