The fastest NBN speed plan is falling out of favour

The highest-speed plan on the national broadband network is becoming a tough sell for telecommunications companies amid concerns the risks and costs are outweighing the benefits.
Nanjing Night Net

A combination of discounts for the slower 50 Mbps speed plans, action by the regulator over unachievable speeds and a budget-sensitive public has industry sources warning 100 Mbps speed plans might not be offered by major telcos in the future.

Some carriers had already stopped offering 100 Mbps plans, said Joseph Hanlon, spokesman for comparison site WhistleOut, which audits about 40 per cent of NBN plans.

Its latest audit found Vocus Group providers iPrimus and Dodo dropped these plans from their sites in late-2017.

It’s understood one of the main reasons for dropping these plans was lack of customer take-up, with the brands targeting the budget end of the market.

In 2017, more than 80 per cent of NBN users were on speeds of 25 Mbps or less – the lowest plans available.

Now that the NBN has provided wholesale discounts on its 50 Mbps speed tier range, telcos have moved quickly to drop prices for this plan, or bump customers on 25 Mbps plans into a faster tier.

This has seen the take-up of 50 Mbps plans jump from less than 3 per cent to about 30 per cent, while the percentage of new orders for 100 Mbps plans remains stable at about 9 per cent of all orders. There was no NBN discount on 100 Mbps speed tier, though there are bandwidth discounts across speed plans.

Australia’s fixed internet recently ranked 55th in the world, behind countries like Austria, Slovenia, Czech Republic and Kazakhstan, with an average speed of 25.88 Mbps.

The focus on 50 Mbps product, with no change to 100 Mbps, had MyRepublic managing director ANZ Nicholas Demos warning his company might stop selling the top tier, because the 50 Mbps products were significantly more attractive to sell.

To date, MyRepublic has sold only the fastest-speed plans, but flagged the introduction of 50 Mbps products this month.

Angus Kidman, spokesman for comparison site Finder, agreed the current discount structures made selling 50 Mbps plans more appealing and was not surprised that it did “appear that some providers are dumping the 100 plans”.

“Given the widespread perception that NBN plans don’t deliver maximum speeds, the push from [the regulator] to make sure providers advertise ???realistic’ speeds and the relatively low-demand for high-priced 100 deals, it makes sense that providers aimed at the cost-sensitive end of the market might decide it’s safer and easier to just not offer the high-speed packages.”

Industry sources also mentioned increased scrutiny from the Australian Competition and Consumer Commission (ACCC) as a major factor.

Thousands of Fibre To The Node (FTTN) and Fibre To The Building (FTTB) customers are set to be compensated after it was found last year they could not get the speeds they were paying for, with the majority having signed up for 100 Mbps plans.

Almost 26,500 of about 42,200 compensated Telstra customers were on this highest-speed plan. Of 8330 clients Optus will compensate, 5430 had 100 Mbps plans. TPG also landed itself in hot water – almost all of the 8000 customers it was required to compensate were on this speed.

An ACCC spokesman said it was an “industry-wide issue” that service providers were required to take responsibility for.

“Investigations into other retail service providers selling NBN broadband plans are continuing, and the ACCC will take enforcement action if we consider that they are not delivering on their promises to customers,” he said.

Telstra, Optus and TPG still provide a 100 Mbps option, but are required to speed-test lines within four weeks of activation and give customers options if they are not achieving the speeds they have paid for – this includes downgrading them to a lower speed plan.

Telstra’s budget brand Belong, which was also mentioned in the enforceable undertaking it entered into with the ACCC in November, does not advertise 100 Mbps speeds to FTTN and FTTB customers.

It’s understood new plans being introduced in mid-2018 should offer discounts on both products, with discussions currently underway with telcos.

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