NBN Co to charge free fibre recipients that don't stick with higher speed plans

NBN Co has indicated that beneficiaries of its free residential fibre upgrades will be charged if they try to drop down from the higher speed service they ordered to qualify for the upgrade within the first 12 months.

After months of uncertainty, the company finally released a series of documents on Tuesday evening that formalise the conditions that residential fibre-to-the-node (FTTN) and fibre-to-the-curb (FTTC) users need to satisfy in order to qualify for a free upgrade to full fibre.

The documents also describe the end-to-end process and responsibilities that NBN Co and retail service providers (RSPs) will assume, in preparation for the commercial launch of the upgrade program in November.

On the qualification side, the minimum order needed to trigger a free fibre upgrade is just as NBN Co has described over the past six months.

That is, FTTN users will need to place an order for a “Home Fast or higher” service; this means a speed profile of 100/20Mbps or greater.

Customers with existing FTTC connections will need to place an order for “Home Superfast or higher”, meaning either 250Mbps or up to gigabit.

NBN Co had previously suggested there would be no minimum contract term commitment, and that appears to continue to be the case.

However, the company had raised concerns about customers placing a qualifying higher speed plan order to get the free fibre, only to then drop back down to a lower speed tier.

While acknowledging there could be genuine reasons behind a downgrade request, such as financial hardship, the company was worried that its upgrade offer could be gamed.

A full fibre connection is more reliable and likely to suffer less dropouts than FTTN, for example, driving fears that customers may use the scheme to get a more reliable connection, despite being most happy on a lower-cost, lower-tier plan.

Part of the purpose of the fibre upgrades is to coax more customers onto higher-speed plans to meet NBN Co's future revenue targets.

NBN Co indicated downgrades will be possible but are likely to come at a cost. 

While that cost would be put on the retailer by NBN Co, it’s not hard to imagine that the retailers - who already complain of thin margins reselling NBN services - are likely to pass it through rather than try to absorb it.

NBN Co said it would soon release a draft version of an ‘on-demand fibre connection offer’ agreement that RSPs will have to sign in order to participate in the upgrade scheme.

The offer agreement “will set out the offer terms and conditions (such as amounts payable for downgrades, [and] program specific service levels) in connection to the on-demand fibre connection program,” NBN Co said. [pdf]

An NBN Co spokesperson confirmed to iTnews that the intent of the downgrade charges is to dissuade FTTN or FTTC users from trying to game the upgrade offer.

"NBN Co is seeking to create some commercial protection against short-term upgrades to ensure the long-term viability of the upgrade program," a spokesperson told iTnews.

"In support of this objective, NBN Co reserves the right to charge an RSP for downgrades (below the minimum eligible speed tier) and disconnections in excess of an allowance level.

"This right will only apply to downgrades or disconnections which occur within 12 months from the upgrade.

"The proposed fee is significantly lower that the variable direct cost incurred to fulfil the upgrade order in consideration of the longer-term value of the fibre asset."

It appears there will be a time limit placed on the early exit charge, such that the intent isn't to require an indefinite commitment from customers that receive an upgrade to stay on the higher tier plans, however.

"Customers do not need to stay on a higher speed service indefinitely," the spokesperson said.

NBN Co said that a draft agreement would be released to RSPs sometime this month “to provide a reasonable time for RSPs to review [it], ahead of the planned commercial launch in November 2021.”

“This release should provide further clarity to RSPs who have submitted ... feedback with further questions on on-demand fibre connections, such as relating to charges,” it said.

FTTC-specific terms

Meanwhile, the wholesale broadband agreement (WBA) operations manual [pdf] contains a large section of updates related to the process by which a qualifying product can be ordered, and how that would trigger a free fibre upgrade.

Of particular interest may be the section dedicated to FTTC to FTTP upgrades - and the impact an upgrade triggered by one user might have on their neighbours.

The structure of the FTTC footprint means that a single distribution point unit (DPU) in the street connects multiple premises. NBN Co uses one, four, eight and 16-port DPUs.

If “network changes” are needed to complete an upgrade, NBN Co said that a “temporary service interruption in respect of ordered products supplied to that premises and to other premises that are associated with the NBN DPU used to serve that premises” may be required.

If so, NBN Co said it would provide RSPs “with at least five business days’ notice of such interruption.”

The on-demand fibre upgrade program will cost NBN Co about $3 billion and see the company, through its construction partners, overbuild about half of the existing FTTN network.

FTTC users are in some ways more fortunate, since the entire footprint is eligible for an upgrade to full fibre, not only a select few.