The national competition regulator has broken with its past differentiated pricing strategy for setting the wholesale cost of the underlying building block of ADSL broadband, instead mandating a flat rate of $16 per month for most of Australia.
The cost refers to what is called the ‘unconditioned local loop service’, or ULLS — a service provided by Telstra to other rival telcos who use its wholesale services. Because Telstra provides this service at a price regulated by the Australian Competition and Consumer Commission, other telcos like Optus, iiNet, Internode and so on can provide ADSL broadband using their own equipment in telephone exchanges.
In the past, the ACCC has mandated a differential pricing approach, depending on where ADSL services were provided — with the price ranging from $6.60 in certain areas — typically metropolitan centres — to $31.30 and even $48 per month further out of town. Now, for most areas, the regulator has set a flat monthly cost of $16.
In addition, the cost of a number of other inputs into telecommunications services has reduced slightly — although in one case it went up.
In a statement, the regulator’s chairman Graeme Samuel said it had decided to set a single ULLS price for most areas in order to promote industry stability during the transition to the new telecommunications access regime, which came into place in January this year. The new prices reflected the application of what Samuel called a “Building Block” model commonly used in other regulated industries.
“It is important to acknowledge the major shift in our approach to pricing these services and that the move to a Building Block model in telecommunications has been widely supported by industry for some time,” Samuel said.
The new pricing model is not required to be adopted by telcos in their negotiations — they can still negotiate independently. However, it establishes what the ACCC described as a “benchmark” which Telstra and others could fall back upon when negotiating deals.
The ACCC is also planning to shortly commence a public inquiry into the making of fixed-line access determinations and will released its pricing model in the area upon commencement of the initiative.
The debate around what the ULLS input into broadband should cost has been raging for years now. In May last year, for example, the Australian Competition Tribunal rejected Telstra’s argument that the ULLS price should be almost doubled to $30 in metropolitan areas — an argument it has attempted to make numerous times.
Much of the pricing for ULLS will gradually become irrelevant over the next half-decade as the National Broadband Network fibre rollout hits Australian premises. Basic wholesale prices for access to the NBN’s fibre range from $24 per month to $150 a month for access seekers — who will also need to pay extra for backhaul data to service each users’ connection.
Image credit: Timo Balk, royalty free
Well, it’s a case of too little to late from the ACCC if you ask me.
Yeah – this could have been done years ago, however I think the passing of the NBN competition legislation on the last sitting day last year has forced their hand – they actually had to do it. I would have expected a lower price – around the $12 mark – but at least the field is level now.
This will tide us into the future as the NBN starts to roll with the main build from mid-next year…
“Graeme Samuel said it had decided to set a single ULLS price for most areas in order to promote industry stability during the transition to the new telecommunications access regime, which came into place in January this year. The new prices reflected the application of what Samuel called a “Building Block” model commonly used in other regulated industries.”
I’m kinda all over the place with my knowledge…
PSTN… Not included, right ?
IF yes, We have to promote stability in dataland but we’re still, potentially, all over the shop with landline calls in the lead up.
A little help here please.
Correct – PSTN is not included…ULL access is merely access to “do something” with the copper, it doesn’t define what service you put on it.
With a “traditional” phone/ADSL service, each provider pays for access to the ULL.
Say your PSTN service is with AAPT and your ADSL is with iiNet.
Both AAPT and iiNet pay to access your ULL. iiNet then connect the ADSL frequencies carried on the ULL to their DSLAM, and AAPT connect the voice frequencies to the traditional phone network.
A “naked” service is simply an ADSL connection over the ULL, with no PSTN service. It’s a slight furphy to say that it’s something special, when really it’s something that’s been possible for many years.
ISDN for example is done much the same way – it’s just a different kind of service running over the same ULL.
Okay, then I was remembering things right.
SO um, Does this not mean that my mothers 30 odd $ basic phone is somewhat of a rip off.
(yes, I know you’re a voip guru, I hope you can look at the question from ‘her now and after’ thing rather than ‘her now and what could be if she voiped’… without throwing up at the banality of it.)
No – lets says it’s going to be $16 for ULL access from now on…the carrier then has to pay for access to a PSTN concentrator, and then add some profit margin.
$30 at retail is on the highish end, but not unrealistic. For example, mine is $26.00 per month.
ok, I got it now. Thanks, Michael.
I will not be getting $160 a month national broadband network internet. For those of you who think I am wrong some person in Tasmania has been on a $160 a month plan for internet since December 2010.
Wrong? No. Pushing a barrow? Yes.
Of course there’s $160/m plans on the NBN. That would be the high-end 100/40, 2-300Gb/month plans. But there’s also….*gasp*….$29/m plans. OMG!
I don’t understand what this means. I won’t be getting a $160 a month service over the NBN either, I’ll be getting one of the cheaper plans… just because more expensive plans exist, doesn’t mean cheaper ones don’t exist as well!
If this person is happy paying $160.00 a month, good luck to them.
As others point out, this would be for a top-end plan, not the more basic or middle rung plans that 90% of people will get.
You can pay $150.00 or more for an ADSL plan now. For example, the Internode EasyNaked XXL plan is $149.95 right now.
http://www.internode.on.net/residential/adsl_broadband/easy_naked/
I smell burning plastic grass.
Paul and Dean please humour me and excuse my ignorance but if the vast majority of customers order and desire a speed from the NBN the is deliverable at the present time why the gigantic spend?
Average broadband speed in Australia is currently about 2.5Mbps (ABS figures), so the base NBN speeds will improve access.
NBN also gives higher reliability, lower latency, and almost limitless expansion possibilities for the future. For example, the current state of the art for GPON technology – (what is being built) – allows for 40Gbps with current fibre signalling technology.
There are already laboratory tests giving 400Gbps with the exact same fibre, through improved signalling technologies.
The reason for the “big spend” is that deploying this kind of infrastructure will eliminate much future spending on upgrades down the track.
The Coalition wanted to spend $6b to get everyone up to 12Mbps. Great. Fantastic. You can do that – but what happens a few years down the track when everyone needs 50Mbps? You have to spend more money again to acheive that. A few years later, you need to throw more money at it again to get even faster.
How many upgrades at what cost will we need to progressively do over the years if we followed the Coalition concept?
By building the NBN as proposed, we eliminate the network as a limiting factor – (like it is now) – and allow the market to spend time, money and effort developing applications on top of the network for the good of everyone.
At the moment, all the investment is wasted patching up a rotting, failing, undermaintained, 60-year-old network that is bursting at the seams, and artificially controlled by Telstra, driven by its legal responsibility to do the best for its shareholders – which is incompatible with consumer outcomes.
That’s why the big spend.
Hi, Sydney.
By “gigantic spend” I presume you mean the NBN. As to speeds “available to the vast majority of customers at the present time”, let me (sigh!) restate what you already know about broadband speeds in Australia.
40% of Australian premises currently have no broadband available. Fewer than 10% have HFC available.
Most of the remaining 50% have ADSL, but the average speed is 2.8 Mbps down and about 700 Kbps up. The average is obviously skewed upwards by a very small number with much faster connections, because the median ADSL speed is 2 Mbps (cf ABS, 20 September 2010).
It is possible today for a business to buy a 10 Mbps upstream connection on many exchanges, if they have multiple copper lines. It costs between $1000 and $2400 for a 10/10 Mbps connection with a few hundred GB of data per month.
But a 50/20 Mbps connection with 500 GB of data per month will retail for under $100 on NBN fibre.
The slowest connection, 12/1 Mbps, will cost about the same as phone line rental now, but will also include unlimited voice calls nationwide because everyone will have NBN VoIP telephones and VoIP-to-VoIP calls do not incur a last-mile copper cost.
Fifteen years of waiting for the free market to deliver universal infrastructure, and six years of trial-and-error design since John Howard’s original 2004 vision for universal broadband proved impossible for $6 billion, is the reason for the “gigantic spend”.
Finally, history shows that even if data demand growth does not skyrocket as people take up IPTV, offsite hard disk backup and video calling (which they will), the NBNCo revenue projections based on 50% still having only 12/1 speeds at 2020 is laughably conservative.
Wholesale revenue due to bandwidth and data upsizing will dramatically exceed these forecasts by any reasonable continuation of past growth patterns, and will obviate any need to sell off the fibre to repay the borrowed build cost (as you know, the construction is funded from borrowings, not money taken from other budget areas).
Hope this clears up your concerns.
+1 to all of this.
On my current ADSL service, I sync at around 17Mb/s which is on the extreme high end for most Australians (I’m a little under 1km from the exchange). However, my ADSL drops out about every week or so, and I need to hard-reset the modem to reconnect.
In fact, while I was overseas a couple of weeks ago, my ADSL at home dropped out and the modem would not reconnect until I got home a few weeks later. I run a source code repository off a server at home (normally I access it all locally, so it’s not really a “server” from the ISP’s point of view, but as I was going away for a few weeks, I wanted to be able to access it while I was away).
Anyway, when the ADSL dropped out, I lost access to my source code repository. Obviously, I had a local working copy, but was unable to sync it, so there was a risk I could lose anything I did while I was away (if anything had happened to my laptop, the potential loss could have been significant).
So, along with higher upload speeds, the main feature of the NBN I’m looking forward is the additional stability. Download speed increases is not such a huge problem for me (yet).
Dean, You have a fault somewhere, which is not handled well by your modem or could be the modem itself. Try another modem if you can. Otherwise a quick and dirty fix for you would be to get a cheap timer switch and set it to cycle the power on your modem a period that you can afford to wait to regain access. Eg, once per day or maybe every two hours.
By the way, Michael, the current speed for a single fibre strand is not 400 Gbps in the laboratory.
On 25 March 2010 in Japan, 69.1 Tbps was sustained over a single ordinary fibre strand for a distance of 240 km.
Note that the fibre capacity had not been reached, but the switches couldn’t sustain any higher speeds than this.
So we still don’t know how fast today’s fibre can go, but 69,100 gigabit services simultaneously served at full throttle over a fibre strand isn’t too shabby. And no doubt fibre technology will improve over time.
I’m talking about GPON – not raw fibre speed.
Jeez, I go away for five minutes and a massive discussion thread starts! :)
That’s what happens when you leave the keys to the liquor cabinet lying around…
I’d just like to thank you Michael for your dedicated efforts to get the right message out there in terms of what e NBN is and what it offers compared to our current environment.
Living in a regional town that has seen no competition nor investment in terms of Telecommunications, it was fantastic when the NBN was announced.
I get tired or reading the same old comments time after time on forums such as Whirlpool and websites such as Delimiter about how ADSL currently offers speeds in which the NBN is going to deliver. They argue that if the NBN is going to deliver the same speeds as is currently offered then why speed billions of dollars to advance the technology? Michael raised a very good point, the fact that current ADSL speeds offered are unobtainable for most and that the NBN will deliver guaranteed speeds (providing that the ISPs buy enough bandwidth, as Internode found out in Tasmania).
It’s time to abolish the ‘misinformation’ campaign being spread by, most likely the Coalition and their supporters. Misinformation is only going to hurt us in the long run, we need the actual facts to be the subject of debate, but as the Coalition know it is more sensational and politically beneficial to spread misinformation rather then debating on actual fact.
I’m glad that the NBN has advocates such as Michael to put the real information into the public arena, it’s just too bad that Michael doesn’t have any political avenue to get the real information into the political arena.
Thanks Michael, Francis and Dean you have presented a very compelling case, and many practical reasons for the NBN to be advantageous for Australians. Let us hope that the promised marvels of the NBN are realised and at a price that is acceptable to the Australian taxpayer.
Excellent commentary. Good read.
This particular group of responses to Sydney’s question are the best and most succinct on why we need to build the NBN that I have seen on any site recently. Well done guys.
Wasn’t the ACCC the one who forced NBNCo to build 120 Points of Interconnect instead of a much cheaper and fairer 14 PoI?
That ruling only benefited Telstra and Optus, with the ACCC claiming they’d handle any uncompetitive backhaul situations with more “regulation”. Why? Why not just go for 14 PoI’s and eliminate the need for any regulation of pricing? How does that help consumers in any way? And what is now preventing companies like Telstra and Optus using their backhaul profits to subsidize their retail broadband rates to destroy the competition?
On the topic of line-sharing, if you compare prices to France, the ACCC’s recommendations are laughably overpriced. While an even playing field is nice, raising metro area line rental prices by $10/month is unjustified, as is a final cost to third parties of $22/month.
You should see internet performance in France outside the biggest cities…that’s what’s laughable.
Comments are closed.