TPG, Aussie Broadband seek longer-term price change from NBN Co

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TPG, Aussie Broadband seek longer-term price change from NBN Co

Retailers lukewarm at latest round of discounts and changes.

TPG and Aussie Broadband want NBN Co to take a longer-term view on plan pricing and fees after the network operator floated yet another round of short-term discounts as well as the resurrection of excess bandwidth charges this week.

NBN Co said this week that it would resume excess fees for connectivity virtual circuit (CVC) consumption at the end of this year, ending a pandemic-related bonus that gave retail service providers (RSPs) up to 40 percent extra above February levels for free.

To partially compensate, it said it would offer two months of transitional credits and bring forward planned CVC increases of 500Kbps on most plans by a few months.

However, the resumption of charges comes at a time when more RSPs than ever want NBN Co to drop CVC fees altogether in favour of a single access charge.

NBN Co also unveiled six months of fee reductions aimed at getting more users onto 100Mbps plans or higher, though it’s unclear if customers could continue once the discount ends.

TPG Telecom group executive of legal and external affairs Trent Czinner said in a statement that while the bringing forward of “of additional CVC inclusions and additional CVC credits” was welcome, “this is still a short-term fix”.

“Ultimately, a simple, flat-rate structure with the removal of CVC would provide retailers with long-term certainty and customers with the best possible experience when using NBN services,” Czinner said.

Aussie Broadband managing director Phillip Britt said “the changes announced by NBN Co are very welcome, but we still do not believe they are enough yet to meet longer term usage trends of our customers.”

“We will continue to work with NBN on where we see issues and possible solutions,” Britt said.

Of the six-month upgrade discounts, Britt said Aussie Broadband would “get on board in time.” 

“We’ll look at the full terms and conditions that NBN Co are placing on these offers and we’ll consider our position from there,” he said.

Meanwhile, in a LinkedIn post, Exetel’s corporate sales director James Linton called the transitional CVC credits and the resumption of full excess charges “bizarre”.

“[They are] in essence forcing RSPs to make less money each month (the margins are already very thin), meaning RSPs could potentially skimp on bandwidth leading to a poor customer experience, or resort to putting up prices at times when many Australians (whose taxes funded the NBN network) are experiencing a lot of distress through record levels of unemployment and other financial strain,” Linton wrote.

Linton also questioned how RSPs would be able to offer a six-month discount on more expensive plans, particularly what would happen once the discount is lifted.

The discounts are for between $2 and $24 a month; at the higher end, that price hike may be difficult to sell.

“This might not sound like a lot, but when you are selling a product for about $130 a month, it makes a lot of difference to the overall margin, and reflects poorly on having to dramatically increase a customers fee after this period (assuming you signed them up on a six month contract),” Linton wrote.

Like others, Linton wanted to see a more simple pricing structure employed by NBN Co.

“The whole premise of NBN was to create a wholesale only entity to encourage more entrants into the market, but right now you would have to be mad to want to start an RSP selling NBN, as you need to employ complex modelling to make plans work in the short and long term,” he wrote.

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