NBN Co sees 250Mbps take-up rise after price cut

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NBN Co sees 250Mbps take-up rise after price cut

While low end rebalances following 12Mbps changes.

NBN Co saw a 28 percent increase in the take-up of 250Mbps services after reducing the price - and uplink speed - of the tier, with Aussie Broadband leading the gains.

Through its wholesale pricing review late last year, NBN Co introduced a new 250/25Mbps tier at a lower wholesale price, targeting fibre-to-the-premises (FTTP) and hybrid fibre-coaxial (HFC) users.

Aussie Broadband adopted the new tier on December 11, which reduced the retail price of a 250Mbps service from $250 to $169 a month.

It appears likely the price reduction had an effect: Aussie Broadband’s 250Mbps user base went from 461 at the end of September to 623 at the end of December, a 35 percent quarter-on-quarter rise, according to Australian Competition and Consumer Commission (ACCC) numbers released today.

"We’re seeing good demand for the higher speed tiers, typically from a set of residential customers who want the fastest speed they can afford," Aussie Broadband’s managing director Phillip Britt told iTnews.

Overall, the number of active 250Mbps services in the quarter was 1351, up from 1051 - a 28 percent jump.

It’s not clear which other retail service providers (RSPs) benefitted from the 250Mbps changes since anyone outside the top six providers is reported as “other”.

The early growth in the 250Mbps could bode well for NBN Co as it prepares to also offer much cheaper “up to gigabit” speed plans.

Britt was cautiously optimistic about the new gigabit pricing, saying that while he believed it would help drive demand for higher speed tiers, "we think it’s still too early to judge what the demand for 1 gigabit speeds will be.”

Additional comments were being sought from NBN Co at the time of publication.

Demand for 12Mbps is clear again

The ACCC numbers also provide a clearer indication of just how much of the NBN user base is signed up to the 12Mbps service.

NBN Co axed some of the most punitive elements of 12Mbps pricing late last year - which were put in place in a now-abandoned bid to force users up to higher plans.

Punitive pricing led some RSPs to migrate customers out of 12Mbps en masse or to stop selling the plans altogether.

It now appears that some 12Mbps users had been migrated to the 25Mbps tier where they could be more sustainably serviced from a price perspective with a likely rate-limited 12Mbps service.

However, with changes to the 12Mbps tier, those users are being moved back again.

“The number of lower speed plans acquired at the wholesale level increased by 61,370 services over the December 2019 quarter to nearly 2.2 million services,” the ACCC said in a statement.

“The net increase is the combination of a rise of almost 160,000 services at the lowest speed of 12Mbps, and a decline of almost 98,000 services at the next highest tier of 25Mbps.

“This has meant that the 12Mbps tier represented 17.6 percent of all NBN wholesale services at the end of the December quarter, up from 16.2 per cent at the end of September, while the share of 25Mbps services decreased from 18.1 percent to 15.5 percent in the same period.

“However, despite this shift at the wholesale level the proportion of retail customers on these plans is likely to have remained relatively stable.

“The ACCC is aware that access seekers shifted a large number of wholesale services from the 25Mbps tier to the 12Mbps tier during the quarter, following changes to NBN wholesale pricing. 

“Under NBN Co’s previous wholesale pricing offers, some service providers were using 25Mbps bundled wholesale services to supply 12Mbps plans to some of their retail customers.”

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