NBN Co to revive 25Mbps broadband services tier

NBN Co is set to revive 25Mbps broadband services on its network as an “intermediate” option for residential users, though it will cost only $8 less wholesale than a 50Mbps plan.

The cost will be reduced by slashing the amount of connectivity virtual circuit (CVC) bandwidth that comes bundled with 25Mbps services, from 2Mbps to 1.25Mbps, under a proposal raised by NBN Co today.

NBN Co virtually eliminated 25Mbps services when it started selling 50Mbps services for the same price at the end of 2017.

Though this was initially a one-year promotion, it later set a flat wholesale charge for 12Mbps, 25Mbps and 50Mbps services, all but ensuring no one would sign up to 25Mbps.

However, as it turned the screws on the 12Mbps users, it gave them few migration options: move to 50Mbps or above, or move off NBN for good. 

For users whose access technology means they can’t get 25Mbps, let alone higher speeds, it is likely the company drove some of those users away altogether.

NBN Co said in a consultation paper to retail service providers (RSPs) today that the revived 25Mbps could be “made available as an intermediate option with a different balance of CVC inclusion and cost.”

Low-income offers move to new consultation

New broadband products for price-sensitive and low-income users have not eventuated.

NBN Co said it would seek to work with interested parties on a solution, rather than propose anything specific for now.

“As respondents that were in favour of developing an offer with conditional availability for low-income households requested that such an offer be co-developed in collaboration with them, further exploration of this solution will be continued in a separate consultation process,” NBN Co said briefly.

It is understood a new consultation paper will be released within weeks.

"We just need to finalize some work," NBN Co's general manager commercial Ken Walliss told iTnews.

"It's a bit broader than just pricing - you need to think about all the reasons why customers may be under represented on NBN and think about how we work with RSPs on that. 

"But that is an area that, having got that initial feedback, we're going to pull together that feedback and then work to the next level looking at those sorts of issues with industry."

NBN Co had been cagey on what - if anything - it would offer this segment of the market, and had adopted a position that price wasn’t the only thing that turned off price-sensitive users from signing up to its network.

Punitive 12Mbps fee cut

Meanwhile, NBN Co offered to cut a punitive fee it has been charging RSPs that use its entry-level bundle (ELB) - marketed as voice-only - for broadband.

The voice-only ELB costs $22.50 wholesale and comes with a measly 150Kbps of CVC for very basic internet use.

Some RSPs - like Optus - that previously marketed 12Mbps broadband products and have existing user bases had no choice but to service those users in the ELB.

That opened them up to a punitive “additional usage charge” of $22.50 per user per month, as well as CVC “overage” charges to make the ELB usable as a broadband service.

Absorbing those extra costs have led to a mass exodus of customers from Optus’ 12Mbps ranks in recent months. 

NBN Co is now proposing to cut the punitive “additional usage charge” from $22.50 to $5.70, but will maintain the CVC overage charges.

As with previous rollbacks of punitive measures on 12Mbps users, however, the damage has likely been done.

It’s unclear whether all the RSPs that have stopped selling 12Mbps services will suddenly reopen sales.

NBN Co’s proposal also falls short of creating a fee structure for entry-level services that is on par with ADSL pricing, as the Australian Competition and Consumer Commission (ACCC) has called for.

Vocus CEO Kevin Russell suggested last week that the ACCC might be able to use a loophole in NBN Co’s regulatory framework to make an access determination that drove down prices for up to 70 percent of the NBN user base.