NBN Co floats 250Mbps minimum order to get free fibre upgrade

Users in NBN Co’s fibre-to-the-node footprint that wish to qualify for a free full-fibre upgrade may need to place a minimum 250Mbps order and/or commit to a minimum contract term under draft rules being canvassed with retail service providers.

NBN Co this week started a “multi-stage consultation” with retail service providers (RSPs) that will shape the rollout of a $2.9 billion upgrade of half of fibre-to-the-node (FTTN) users to fibre-to-the-premises.

While plans for the upgrade were revealed in late September last year, criteria for what would qualify - or guarantee - a full-fibre upgrade have been hard to pin down.

A large part of the difficulty is that NBN Co is yet to formally determine the criteria.

Executives indicated at Senate Estimates last year that the bar for qualification could be set extremely low - such as by ordering a service that is a single speed tier higher than what the user achieves today, and with no NBN Co-enforced minimum contract term.

But the thinking on this appears to have evolved since those comments were made, and a consultation paper now raises the prospect of a minimum 250Mbps order being needed to trigger a so-called “on-demand fibre upgrade”.

It is understood that placing an order for a 100Mbps service would trigger a free fibre upgrade only in limited circumstances, such as where the existing copper line doesn’t support a certain (though unknown) speed.

Additionally, NBN Co has raised the prospect of levying minimum contract terms or cost recovery charges on users that are granted a fibre upgrade and then, for whatever reason, don’t use the upgraded line to run higher speed services.

Making free residential fibre upgrades conditional on time or monetary commitments by the customer essentially replicates NBN Co’s approach to similar upgrades for business customers.

It is, however, a departure from previous commentary which suggested that NBN Co would not force upgraders to commit to a certain contract period.

"We don't have any lock-in with the retailers,” NBN Co’s chief customer officer Brad Whitcomb told Senate Estimates last year.

“That would be up to the retailer themselves. If [the user] signed a contract with the retailer, the retailer may hold them to it, but that wouldn't be NBN's decision."

If NBN Co does wind up enforcing contract terms, it will set the minimum time period in consultation with RSPs, a spokesperson told iTnews.

“NBN Co is reviewing the feasibility of offering the technology change from FTTN to FTTP,” NBN Co’s spokesperson said.

“As part of this evaluation, NBN Co is considering different ways to help ensure this program earns a reasonable rate of return.

“Some of the options currently under review by NBN Co include a downgrade/modification fee applicable where, following an upgrade to FTTP at a premises, an RSP requests to downgrade a customer’s service to a speed below the minimum eligible bandwidth profile (currently 100/20Mbps) before a minimum specified timeframe has elapsed.”

NBN Co is also considering “term contracts, the duration of which would be determined following consultation with RSPs; a one-off service charge payable as a partial contribution for the lead-in installation; or a commercial structure incentivising certain behaviours” at an aggregate RSP level, the spokesperson said.

The spokesperson did not elaborate on the behaviours it may seek to incentivise, however this could essentially encompass Whitcomb’s earlier commentary, putting the onus on RSPs to come up with and enforce mutually agreeable minimum terms, thus negating the need for NBN Co to formally set them.

Telecommunications industry publication CommsDay was first to report the four draft options for cost recovery.

It is understood that NBN Co wants to ensure that only customers with a genuine long-term need or want for higher speeds access the free upgrade program.

NBN Co is accepting submissions from RSPs on this first batch of ideas up until February 19.

It will further consult on the outcome of this initial round of feedback via a further proposal to be issued to the industry in late March or early April.