NBN slammed over broadband price review: Internet providers demand major changes, lower cost

A battle is breaking out between the NBN and internet providers over how much you’ll pay for broadband. This is how it will affect your family.

A war of words has erupted over the cost of broadband in Australia after the NBN revealed plans to freeze wholesale internet prices for the next two years.

But Australia’s major internet providers have slapped down its proposals as “disappointing” and not going far enough, claiming Australian consumers will be forced to choose between paying more or receiving less in future years.

NBN Co revealed the details of its latest wholesale pricing review on Monday, outlining two proposals to extend existing broadband prices while adding extra capacity to some high-speed packages.

The plans would see current wholesale broadband prices continue until April 2023 in a move NBN Co chief customer officer Brad Whitcomb said would keep internet access affordable in Australia.

“Since 2016 the cost that we charge retailers per gigabit has dropped from 33 cents to just 15 cents,” Mr Whitcomb said.

“While the cost of virtually every other utility-like service has gone up and up, our wholesale charge per gigabit has already less than half of what it was five years ago and we do expect that trend to continue.”

A war of words has erupted over the cost of broadband in Australia after the NBN revealed plans to freeze wholesale internet prices for the next two years. Picture: Supplied

But the pricing review has received a scathing reception from internet providers, with a Telstra spokesman slamming the review as failing “to offer any real change” and pushing “hard decisions down the road”.

“It’s a simple equation — NBN revenue (for every customer) will continue to increase substantially over time so without change consumers will end up paying more for home broadband and/or the level of service they get will drop,” he said.

“That’s not something anyone wants to see.”

And Optus regulatory and public affairs vice-president Andrew Sheridan said the company was “disappointed” the review did not address long-running complaints about the way NBN Co charged for broadband.

“This had been positioned as a major review that would seek to tackle many of industry’s concerns with wholesale pricing,” he said.

“Instead, it proposes only incremental changes in 2022. It does not address current elevated consumption levels nor the over-reliance on variable charging and break fees.

“NBN continues to drive uncertainty and price increases into the market.”

A Telstra spokesman slammed NBN’s price review as failing “to offer any real change”. Picture: NCA NewsWire/Bianca De Marchi

Aussie Broadband managing director Phillip Britt also called the proposals “undercooked” and said by the time the extra capacity came into effect “traffic will be significantly higher again”.

“Whilst we appreciate NBN consulting on pricing, the timeline and approach proposed is completely out of step with industry expectations,” he said.

Australian internet providers have long criticised the way NBN Co charges them to deliver broadband, including the CVC (Connectivity Virtual Circuit) charge, which relates to bandwidth and has been described by Vodafone as an “artificial handbrake” on broadband speeds.

Independent telecommunications analyst Paul Budde said NBN Co was overdue to change its pricing structure and big changes could see more Australians take out high-speed connections.

“People are reluctant to pay more for higher speeds so they limit the package to a basic package,” he said.

“It makes sense for families with kids who are studying, who are using multiple video-based services, and parents who have to work from home more and more; that group will greatly enjoy high speeds.”

Independent telecommunications analyst Paul Budde said NBN Co was overdue to change its pricing structure. Picture: Supplied

Even though it was not outlined in its proposals, Mr Whitcomb said the company would listen to proposals to change NBN’s pricing structure.

“We have heard from industry that there is a desire for more certainty going forward and a reduction in variable costs in exchange for more certainty around fixed costs and we’re very open to that,” he said.

“We’re very open to potentially moving to a different construct if it enables us to reinvest in the network and lead to ever-increasing customer experience.”

The outcome of the first part of NBN’s pricing review will be released in April.