NBN Co faces price flex test as more people work from home

NBN Co is facing pressure from some quarters to act in anticipation of a large number of Australians that could wind up working from home due to the coronavirus pandemic.

The company presently makes changes to its pricing almost exclusively using temporary discounts and waivers, meaning it has a mechanism whereby temporary price relief could be made.

At present, however, the need for action is unclear.

There are certainly indications of increased bandwidth consumption around certain products important to remote work, such as videoconferencing.

Megaport, which provides connectivity between business operations, noted in an ASX filing that it is "seeing significant traffic increases across [its] network".

NBN Co said in a statement to Twitter on Monday that "more people working from home will change the profile of data traffic on the NBN, increasing residential usage of the network throughout the day and in the busy hours (7-11pm).” 

The change, according to NBN Co, is so far minor, although the company did not base its measurement on a weekday.

"On Saturday 14 March, with many Australians spending more time at home, network traffic was up by more than five percent on the previous Saturday," NBN Co said later.

"[We] will continue to monitor and augment the network as quickly as possible to meet potential demand surges."

The company said its engineering teams "have been planning for, and strengthening the network to help meet residential data demand that will likely surge, based on overseas examples, at different times of the day and night."

NBN Co said it is “actively working with retailers to ensure we optimise the network to support Australians in anticipation of unprecedented demand.”

Wholesale levers

There remains interest in whether NBN Co has wholesale levers it could pull in the event that broadband demand temporarily increased beyond providers’ - and users’ - ability to pay.

On Monday morning, NBN Co indicated that it would continue to be on retail service providers to buy enough capacity if usage profiles changed and users’ need for bandwidth increased.

“We're confident that we've built sufficient capacity into the network to accommodate Australia’s increasing demand for data,” it said.

“This includes the availability of capacity that would be required if more people choose to work from home and any other possible changes in usage patterns.”

Shadow Minister for Communications Michelle Rowland said that “consideration should be given to providing retail providers with temporary capacity charge relief, in the event NBN speeds become congested as COVID-19 leads more employees and children to use the internet from home.”

“The NBN already supports significant peak hour data consumption, and for the time being, the capacity purchased by retail providers appears to be appropriate to meet these demands,” Rowland said.

 “However, if peak demand overtakes capacity, this may present telecommunications providers with a decision to either incur greater costs or to tolerate greater levels of NBN speed congestion.

“Labor considers these unique circumstances do lend themselves towards NBN Co providing retail providers with temporary and targeted capacity relief should these circumstances arise over the COVID-19 period.”

Telecommunications entrepreneur backed the argument on Monday night, calling for a temporary bandwidth boost for customers connected to the NBN.

"Can NBN Australia please temporarily double or even triple the amount of CVC capacity that is provided under the existing NBN residential bundles to allow for a nation that is going to be doing everything online at the same time in the very near future?" Slattery said.

"Parents will be working from home, while kids will be studying at home - both using video, placing massive demands on providers who have offered plans that are designed for normal conditions."

NBN Co CEO Stephen Rue later left the door open to unspecified relief options.

"In terms of the expected requests for additional [bandwidth] capacity, we will work with the Industry to find the best solution," he said. "Clearly we all need to play our part.”

It isn’t just service consistency that regulators have been concerned, however. 

In the US, for example, regulators also struck agreements with telcos for certain hardship provisions to remain in place, preventing them - for example - from cutting off services in the event that a person could not temporarily pay their bill.

The company did not address questions about the specific wholesale levers available to it should pricing relief become warranted.

Aussie Broadband acts

Some retailers started to act by Monday night, with Aussie Broadband managing director Phil Britt saying the company is already keeping a close eye on data growth.

“I understand that many people are concerned about how the next few weeks will play out. We’re keeping an eagle eye on network usage and we will upgrade as necessary if we see peaks beyond our normal high range,” he said.

From March 18, Aussie Broadband said it would allow any "remaining customers on 12/1 speed plans to change onto to a 25/5 plan to help them work from home if required"; temporarily stop all service suspensions due to late paytments; and provide unmetered data "between 6am-6pm for all customers on limited data NBN and ADSL plans."