NBN should abolish speed tiers, says economist
blog Those of you with a more technical bent (hell, we hope that’s all of Delimiter’s readers at this point) will be aware that the speed tiers set by NBN Co — 12Mbps, 25Mbps, 50Mbps, 100Mbps and eventually 1Gbps, plus all the upload tiers — are actually artificial. There’s no real reason why the NBN needs to offer speeds at these discrete tiers, apart from commercial reasons: Giving retail ISPs options to offer customers, giving end users familiar options comparable to existing ADSL/HFC broadband services and so on.
However, according to one economist, the NBN might actually see higher uptake if just one flat speed (presumably 100Mbps, initially) was provided. The ABC reports (we recommend you click here for the full article):
NBN Co is offering five different speeds at different prices, which telecommunications consultant and former Telstra chief economist John de Ridder says is artificial because, once the network is built, it does not cost more to deliver 100 mbps over the NBN than it does the slower speeds. “They could offer the same speed, unlimited speed basically, to everybody but they choose to ration it out, charging more for higher speeds,” he said.
The difficulty with Ridder’s argument is that it’s actually not based on evidence. He claims in the ABC’s article that most people won’t pay more to take up the NBN’s higher speed tiers. In fact, the evidence so far shows the opposite: Most will. In October last year NBN Co revealed that 44 percent of NBN customers who have so far signed up to use the network had opted for 100Mbps options, and another survey published in June last year showed that 85 percent of Australian consumers wanted to be able to connect to the Internet at speeds of 50Mbps or higher.
However, that’s not to say that de Ridder’s idea doesn’t have merit. It does: A lot of merit. I’ve written previously that the current tranche of NBN plans is based directly on thinking imported from the previous ADSL broadband framework; when actually there’s a clear opportunity to do things differently; better; with the new technology.
I don’t know whether de Ridder’s idea of abolishing NBN speed tiers and charging only for actual usage of the network is economic; and I certainly don’t think Australians are ready for such a radical change to their broadband habits. But I do think it’s the kind of idea which retail ISPs should be modelling over and experimenting with; in much the same way as ISPs like Exetel have started to experiment with NBN plans featuring unlimited downloads.