Optus shifts 100k premises out of NBN 12Mbps in three months

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Optus shifts 100k premises out of NBN 12Mbps in three months

Equivalent to 65 percent of its base in entry-level tier.

Optus has shifted over 100,000 premises off 12Mbps NBN services after revealing the financial toll they were having due to price changes by NBN Co.

The large-scale exodus is revealed in the latest quarterly numbers from the Australian Competition and Consumer Commission (ACCC), which were released today. [pdf]

As revealed exclusively by iTnews last month, Optus is incurring millions of dollars in excess bandwidth charges every month to keep servicing a legacy base of 12Mbps users on the NBN.

This is because it has had to migrate the user base onto a new plan structure that NBN Co has tried to make useful only for voice calls. 

To make it useful for broadband, retail service providers are forced to buy a large amount of connectivity virtual circuit (CVC) from NBN Co and absorb the extra cost.

The ACCC numbers show that Optus moved 102,162 users out of the 12Mbps tier in just three months, equivalent to 65 percent of its 12Mbps user base.

Optus now has 54,640 12Mbps users, the least of the four major retail service providers on the NBN.

It also oversaw a similarly large customer exodus in the 25Mbps tier, where its user base fell from 162,617 at March 31 to 82,581 just three months later - a 49 percent reduction.

The most likely explanation is that Optus shifted many of these customers up to 50Mbps services, where NBN Co currently offers the best wholesale pricing.

Optus’ 50Mbps user base effectively doubled over the period, going from 339,967 to 600,190 users. 

Vocus - which has also pulled the pin on new 12Mbps sales - also saw its user base in that tier dip.

Vocus went from 97,483 12Mbps users down to 85,083 users. 

Again, it appears likely that these users moved up to higher NBN tiers, rather than being lost to alternative technologies.

What is likely to keep the pressure on NBN Co and regulators like the ACCC to act on entry-level broadband affordability is that, outside of Optus and Vocus, other RSPs like Telstra and TPG continued to accumulate both 12Mbps and 25Mbps users.

That didn’t go unnoticed by ACCC chairman Rod Sims, who has already suggested the possibility of extraordinary intervention to force NBN Co to offer more affordable entry-level broadband options once more.

“About two million Australians remain on entry-level 12Mbps and 25Mbps plans,” the ACCC said today.

“Although the market share of these plans declined slightly in the three months to June, they still account for more than one third of all NBN services across Australia.”

In addition, “while there is greater take up of high speed products, there are a significant number of consumers who prefer entry-level products”, the regulator noted.

Many consumers, particularly those on low incomes, “do not have a genuine choice between entry level and higher speed NBN plans”.

“We remain concerned about the entry-level options that are available on the NBN,” Sims said.

“Consumers must have a genuine choice. 

“They should not be forced to take up higher-speed plans due to a lack of entry-level products that are affordable and that offer adequate data allowance. 

“We remain in active discussions with NBN Co about wholesale pricing.”

Many RSPs, including Vocus and Aussie Broadband, are advocating for affordable options for low income households as part of the current NBN Co wholesale price review.

NBN Co has so far resisted calls to act, but may not be able to avoid the affordability issue much further as regulators take a keener interest in the issue.

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