Aussie Broadband ratchets up pressure on NBN Co over looming bandwidth bonus expiry

Aussie Broadband has warned NBN prices could rise - or service levels fall - if a bandwidth bonus applied by NBN Co over the COVID period is fully withdrawn on August 19.

Managing director Phillip Britt said that customers had “settled into a pattern of using about 10 percent more bandwidth than originally predicted pre-COVID”.

This reflected a permanent change in customers’ internet behaviour, one that retail service providers (RSPs) now had to factor into the cost of supplying NBN services.

NBN Co has provided internet providers with up to 40 percent extra bandwidth over their February consumption level for free.

It did so to prevent the rise in work-from-home users - and the use of online and cloud-based services generally - during COVID from impacting the performance of NBN services.

There have been questions for months from across industry on the future of the bonus.

Even NBN Co’s CEO Stephen Rue admitted on June 30 that the company expected to sustain some of the uplift in the amount of traffic running across its network post-COVID.

Rue suggested the pandemic would result in sustained traffic growth above the 25 percent year-on-year that NBN Co has seen in the past.

On those numbers, making even 10 percent of the bonus bandwidth permanent could be feasible, as it would still provide space for NBN Co to sell some extra bandwidth to RSPs every year.

“NBN’s extra 40 percent bandwidth to cope with peak demand during COVID certainly cushioned the impact, but once it’s gone, we don’t believe traffic levels will return to original forecasts even without areas of the country going in and out of lockdown,” Britt said.

“Most providers are still provisioning large amounts of bandwidth and when the offer finishes in mid-late August, they will need to adjust back.  

“I believe this will have an impact on peak time speeds because there isn’t any more to give without raising retail prices.”

An NBN Co spokesperson told iTnews that the company is “continuing to monitor demand on the network as well as the evolving situation with respect to COVID-19".

"We expect to provide an update to industry in the days ahead," the spokesperson said.

However, even if NBN Co does decide to make some of the COVID bonus bandwidth permanent, Britt said it would be “a band-aid solution to a deeper problem.”

This deeper problem is the gap between the amount of bandwidth that comes bundled with each NBN service, and the amount of bandwidth the service actually needs to stay performant against a backdrop of year-on-year increases in usage.

Aussie Broadband argued for more bandwidth to be added to bundles during last year’s wholesale pricing review, though the outcomes of that process fell well short of the requested amounts.

“COVID-19 has done three things. It’s shown that the NBN is capable of delivering a solid reliable service when our nation needed it most; it’s shown that the network can enable large scale working and schooling from home; and it has shown many people how to do new things and find new uses for the network that they may not have done before,” Britt said.

“But even without COVID, bandwidth usage is out-growing the predicted rates when NBN last updated its bundled [bandwidth], and the next update isn’t until May 2021.  

“Even then, the amounts proposed are only just going to cover the additional usage we are seeing now let alone in May 2021.”

Britt said he was not arguing against NBN Co “charging retailers appropriately.” 

“NBN Co obviously needs to continue to generate income to continue to maintain and upgrade the network,” he said.

“However, I believe that we need to scrap [bandwidth charges] and move to a single access charge based on the speed tier chosen, with no usage or [bandwidth] component.  

“Not only does it simplify everything, but it also gives telcos more certainty in how they can set prices.”