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NBN Co has again blasted customers for choosing plans that allegedly mismatch their usage profiles, claiming that high-use customers on low-speed plans “in effect ‘free-ride'” on its network.
High-use clients on the previous AAPT unlimited ADSL package have long been a target of operators, with iiNet infamously dubbing them “leeches” in an attempt to discourage them from using the service.
In the period of the NBN, NBN Co has tracked the most prolific downloaders and said earlier this year that over one-third of consumers are on a plan that does not correspond to their usage patterns.
The Australian Competition and Consumer Commission (ACCC) published new sections of a contribution in support of NBN Co.’s updated special access undertaking (SAU).
NBN expanded on this complaint in the section on price, criticising a group of these users for placing RSPs and it under financial strain.
It acknowledged its part in the predicament’s development, but added that it planned to remedy it by “incentivising efficient use of NBN speed offerings.”
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“NBN Co has many end-users with high data usage who subscribe to low-speed plans,” the telco said.
“These users could be expected to have high willingness to pay for broadband services, but in effect ‘free-ride’ on the situation such that retail service providers (RSPs) find it difficult to pass variable data costs on to them.
“Having high-data users on these plans means that RSPs must either provision more CVC [connectivity virtual circuit] bandwidth, or if not (for cost reasons), have those high-data users disproportionately use the available CVC bandwidth, which results in a worse experience for other (lower-use) customers.”
NBN Co believes that by reducing the distance between its price tiers’ “steps,” it might entice heavier but still price-sensitive users to switch from “inappropriate plans” by making the higher tiers appear more appealing.
It said, “The narrowing of the wholesale pricing differentials between the lower and higher speed tiers should encourage such users to migrate to more appropriate high-speed plans.”
The lowest tiers, where the majority of users now reside, will see wholesale pricing rises as part of the “narrowing,” a change that might make those tiers less desirable.
The issue, according to NBN Co, is a side effect of its current two-part pricing system, which imposes a variable bandwidth fee on top of a set service fee.
It acknowledged that this structure had encouraged what the operator perceived as inefficient use of its network.
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The telco said, “The current two-part tariff at the wholesale level has created challenges for the market instead of promoting efficiency as it was intended to.
“For example, when heavy network users, prone to large file transfers such as game updates, take up residential retail plans, this can create pricing uncertainty for RSPs as a result of CVC charging.
“Additionally, RSPs have stated that it takes a significant effort and cost to manage their CVC provisioning.”
In the SAU, NBN Co has suggested charging a “flat rate” for services of 100Mbps or more by the middle of 2023 and for services of less than that by the middle of 2026.
According to NBN Co, the situation might have “in theory” been “solved” sooner if RSPs had consented to pass variable CVC costs on to heavier users, however it was noted that this was unfavourable at the retail level.
NBN co said, “In theory, this issue could be solved if RSPs charged two-part retail tariffs to users – consistent with the wholesale AVC and CVC pricing currently used by NBN Co.
“Users would then pay a variable component reflecting on their data usage, in addition to a fixed charge. High-data users would pay more, meaning they would be better off on a higher speed tier with a larger (or uncapped) data allowance.
“However, NBN Co has heard from RSPs that two-part tariffs and the associated uncertainty over total monthly bills are not accepted at the retail level, and that RSPs are effectively forced by competitive pressures to offer fixed price plans.”
Source: IT News
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
