After nearly three years of reporting on the troubled pricing policies of NBN Co, the Australian Competition and Consumer Commission (ACCC) has finally given its approval to a revised Special Access Undertaking (SAU) for the National Broadband Network (NBN). This decision ushers in a new era of NBN pricing and service standards. While the changes may seem like a formality to some, the impact on retail internet providers and NBN customers will be substantial.
One of the most significant changes is the elimination of connectivity virtual circuit (CVC) bandwidth charges for services with speeds of 100Mbps and above, starting from December 1. For all other services, these charges will cease by mid-2026. NBN Co is also introducing a 25/5Mbps service as the entry-level broadband speed during the first three years of the new regulatory cycle, making it available at about half the price of the existing entry-level offer.
Wholesale prices for 25Mbps and 100Mbps (or faster) services will see reductions, although there will be a slight increase in the wholesale price for the 50Mbps speed service. The ACCC acknowledges that some of these changes may not align with its support but believes that they won’t materially affect broadband users’ interests. This new pricing structure is aimed at shielding customers from potentially larger price increases in the future as NBN Co aims to recover some of its network infrastructure costs.
Under the new SAU, NBN Co will take on more responsibility and investment risk to meet the anticipated growth in data demand over the next two decades. This shift is expected to make higher-tier plans more affordable for customers, though the practical implications of these pricing changes are still a matter of speculation.
This decision comes after extensive collaboration between the industry and regulatory bodies over the last two years. The current government, led by Finance Minister Katy Gallager and Communications Minister Michelle Rowland, credits this decision to reset the regulatory process, which allowed for a more favourable outcome for end-users.
Meanwhile, Retail Service Providers (RSPs) are racing against the clock to adapt to the changes brought by the new SAU. These changes will impact the three primary cost elements for RSPs when procuring NBN services: access pricing, capacity pricing, and network-to-network interfaces.
Under the previous Wholesale Broadband Agreement (WBA4), RSPs put significant effort into managing CVC, including national pooling and distribution of costs. However, the new SAU marks a significant departure from this approach. RSPs will now only be charged for capacity used on services of 50Mbps or below, which could present challenges, particularly in regions where bandwidth is costly.
The transition to the new SAU and the introduction of the fifth iteration of the Wholesale Broadband Agreement (WBA5) require RSPs to reconfigure their operations and adapt to the evolving landscape. NBN Co plans to offer daily usage reports for 50Mbps and lower users, aiding RSPs in this process.
The transition to the new SAU and WBA5 presents both challenges and opportunities for downstream retailers. RSPs will need to reevaluate their existing networks, potentially favouring the purchase of services over maintaining a network. The landscape is shifting, and RSPs must navigate this uncharted territory as they embrace the new era of NBN pricing and service standards.
Paul Budde