NBN Co expects seven-fold growth in 50Mbps users by June

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NBN Co expects seven-fold growth in 50Mbps users by June

Abandoning the 25Mbps tier.

NBN Co is predicting it will have more than 1.2 million premises on 50Mbps plans by June, seven times more than at the end of 2017.

The bullish growth prediction - made before NBN Co hands down its quarterly results today - is based on take-up changes seen in rolling 12-week averages maintained internally by the company.

These numbers will not be available via public reporting channels - namely the ACCC’s quarterly wholesale market indicators report - for several months.

If current growth in the 50Mbps plan - driven by special promotional pricing - can be sustained, NBN Co will see a major change in its product mix take-up.

According to last week’s ACCC numbers, the mix is currently 29 percent on 12Mbps, 54 percent on 25Mbps, 5 percent on 50Mbps and 12 percent on 100Mbps (and a tiny percentage on tiers above that).

It is understood that, on a rolling 12-week average basis, the mix is now 23 percent on 12Mbps, 34 percent on 25Mbps, “around 30 percent” on 50Mbps and likely around 12 percent on 100Mbps.

The lack of growth in the 100Mbps tier is primarily due to NBN Co not being able to sell HFC connections while it addresses performance problems on that part of the network.

Only a small proportion of the company's fibre-to-the-node (FTTN) network is capable of 100Mbps, limiting its selling ability.

The product mix will continue to change between now and June; NBN Co says “35 percent-plus” of its user base by June will be on either 50Mbps or 100Mbps plans.

The majority of users adopting 50Mbps plans - and who are expected to flood in over the coming months - are those who are already signed up to a 25Mbps product.

NBN Co’s temporary price offer, where the wholesale cost of a 50Mbps plan is the same as 25Mbps, is allowing retailers to upgrade their existing user base.

NBN Co said of the 200,000 users that had adopted 50Mbps plans since the temporary pricing was announced at the end of last year, only 50,000 - or 25 percent - were actually new service orders.

The remainder are upgrades from 25Mbps services.

Most of the major NBN retail service providers - including Telstra, Optus and the TPG group of companies - have adopted the 50Mbps promotional pricing.

However, there are differences in interpretation between the retailers: while some allow customers to keep the 50Mbps upgrade at no cost for the entire length of the contract, others will raise their prices for the remainder of the contract once the temporary pricing ends.

The promotion mimics some aspects of a new permanent price construct that NBN Co plans to implement, and which the company hopes will encourage customers to stay on higher-tier plans.

NBN Co said it would need to provide RSPs time to make system and marketing changes in order to accept the new price construct, and therefore offered a temporary price cut on an existing product to begin the change process.

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