Catch issues early, fix them fast – Free trial
[ad] With GFI Cloud you can easily manage and secure your remote workforce – wherever they are, from wherever you are! The simple IT management platform includes patch management, antivirus, web protection, monitoring and remote control. Get the benefit of endpoint protection with the ease of central management. Start a free trial now.
Great articles on other sites
- Sydney Opal card travel history can be accessed by police
- NBN analysis 'like foxes reviewing the hen house': Clare
- Call made to end inflight phone ban
- Australian government undoing profit shifting clamp down: Labor
- National security law reforms
- Victorian Government calls for contributions to shape Victoria’s digital economy
- Will IBM pip Azure at the Aussie cloud post?
- Competition watchdog should break up Foxtel monopoly: Ludlam
- Susan Sly gives up on the CIO game
- Vic Labor puts its support behind mobile police
Blog, Telecommunications - Written by Renai LeMay on Friday, February 10, 2012 12:07 - 215 Comments
NBN pricing revisited: The ARPU argument
blog In well-regarded industry newsletter Communications Day this morning, publisher Grahame Lynch takes a potshot at Delimiter and our audience over recent articles attempting to correct inaccurate statements from the Coalition that broadband prices will rise under the National Broadband Network. He writes:
“In recent weeks Malcolm Turnbull has been engaged in a somewhat unseemly online dispute with an Internet website and its band of pro-NBN followers who are targeting him over what they allege are his inaccurate claims that the NBN will cause broadband prices to rise. They point to the initial round of NBN retail offers, which suggest the opposite.”
The full comments are available online here, buried deep in an otherwise innocuous commentary about Telstra’s half-yearly financial results yesterday. I encourage you to read them in full.
Now, leaving aside the lack of courtesy in not even naming Delimiter (yo, Grahame, what up, my man?), what Lynch goes on to argue is that NBN Co is intentionally keeping its wholesale prices down at the moment to ensure that retail NBN prices aren’t higher than current ADSL or HFC cable broadband pricing. He then goes on to point out that NBN Co’s business plan states that it expects the average revenue per user (ARPU) to eventually rise — from, as Lynch states, $23 in 2013 to $32 in 2015 and $52 by 2020. He writes: “There’s no arguing around it: the only point of an NBN is to provide a faster-than-today service but once you start using it beyond DSL- style speed and download levels you will pay more.”
Now, the first point is one which has been raised on Delimiter by other commenters previously, and you would think it would have some merit. But the difficulty is that NBN Co has committed to the ACCC that it will maintain wholesale prices to a reasonable level over the 30 year period governed by its Special Access Undertaking document. The document plainly states that NBN Co’s basic broadband pricing will remain the same until June 2017, and that after that point, price rises will be limited to half of consumer price index rises in any one year. They also can’t be accumulated over time.
In short, NBN Co has guaranteed long-term, affordable, price stability on its wholesale prices, which will ensure similar stability in the retail market. Lynch has not addressed this issue.
With respect to Lynch’s second comment about ARPU, I am unclear as to why he has included it. What NBN Co is essentially saying in its business case is that it expects consumers to use more and more broadband over the years, buying faster broadband services and consuming more data. This is, of course, true, and it will lead to NBN Co making more money from those consumers.
However, this does not mean that broadband prices in of themselves will consequently rise. It may mean that consumers will sign up to higher value plans. But those plans won’t cost comparatively more than they used to.
There is also evidence that in many cases, consumers won’t actually need to switch to higher value plans. For years, Australian broadband prices haven’t changed substantially. ISPs have not been cutting prices substantially. Instead, as iiNet CEO Michael Malone has pointed out, the focus has shifted to giving customers more value (quota, and extra services such as IP telephony) for the same cost. This has become possible due to factors such as the decreasing cost of international backhaul to Australia, among other factors.
Now, it might be possible for the Coalition to start arguing that new benchmarks will be set under the NBN for what an affordable broadband service might be. In 2012, most people are happy with ADSL2+ speeds (usually up to 16Mbps or so), and a few hundred gigabytes of quota per month. The Coalition could argue that in 2015, a basic broadband service might be faster, say 25Mbps or 50Mbps, with quota of 500GB a month. And that because people are switching to higher value plans to get such services, in real terms, broadband would be more expensive under the NBN.
However, this is not what the Coalition is currently arguing. And in any case, in an age where ISPs like iiNet are offering 100Mbps NBN plans with a terabyte of quota for $99.95 a month (the absolute top end option in a market which starts at a mere $34.95 a month) … I would strongly argue that even this argument wouldn’t hold water. In the NBN age, broadband is going to be highly affordable, as it is now.
Grahame Lynch is a respected telecommunications commentator and a professional colleague of mine with whom I have shared many an ale. But, like other commentators on the issue of NBN pricing, he hasn’t provided enough evidence to make his case that broadband prices will rise under the NBN. And what evidence he has provided is more in the line of speculation about what NBN Co’s business plan might mean in the long-term. Meanwhile, in the real world, ISPs like Exetel are still cutting their NBN prices.
That’s the reality of NBN pricing.
Blog, Enterprise IT - Jul 5, 2014 13:53 - 0 Comments
More In Enterprise IT
- Qld’s Grant joins analyst firm IBRS
- Westpac dumps desk phones for Samsung Android mobiles
- Ministers’ cloud approval lasted just a year
- WA Govt can’t fund school IT upgrades
- Turnbull outlines Govt ICT vision
Blog, Telecommunications - Jul 5, 2014 12:12 - 0 Comments
More In Telecommunications
- Telstra gets $150m for NBN FTTN trial
- How Australia got online 25 years ago
- Palmer pushes for minimalist NBN policy
- NBN debate heats up at IEEE conference
- Spirit deploys 200Mbps FTTB to Southbank
Analysis, Industry, Internet - Jun 23, 2014 10:33 - 0 Comments
More In Industry
- ABC tech reporter founds micro-transactions startup
- Australia’s got ICT talent: So how do we make the most of it?
- ‘Thriving’ Aussie tech incubator scene a ‘mirage’
- Corporate highs: The US P-TECH model for schools in Australia?
- Facebook wants to hide its Australian earnings
Blog, Digital Rights - Jun 30, 2014 22:24 - 0 Comments
More In Digital Rights
- “Rational debate” needed around surveillance
- Web blocking technically impossible: iiNet reminds Govt of undisputed fact
- We like e-readers – but library users are still borrowing books
- Coalition, Labor support new surveillance laws
- Anti-piracy laws will increase piracy, says Budde