TPG Telecom Predicts NBN 50Mbps and 100Mbps Price Convergence – Telco/ISP

TPG Telecom has predicted that the cost of 50Mbps and 100Mbps services on the NBN could be the same within a year if a new pricing model is approved.

In a submission [pdf] published by the ACCC, TPG Telecom said that one effect of the current price proposal for special access companies (SAU) will be to eliminate any price differences between the two tiers.

“As part of the SAU amendment proposal, NBN Co proposes to immediately increase the prices for the 50/20 Mbit/s speed tier,” the telecom company said.

“TPG Telecom’s preliminary analysis shows that the SAU variation proposal could result in the average cost of the 50/20Mbps speed tier being identical to the 100/20Mbps speed tier within a year, thereby making the 50/20Mbps speed tier obsolete over time and eliminating any reasonable price relationship between these two products.”

It’s a model that NBN Co has used repeatedly to get the majority of its users up to higher speed tiers.

The company has previously offered 25Mbps and 50Mbps services at the same price to encourage mass adoption of 50Mbps.

More recently, incentives such as six months of free upgrades to higher speed tiers – a kind of “try-before-buy” offer – have been used to lure more users off the lower speed tiers.

However, it still faces some limitations to enable this type of bulk migration to 100Mbps, as some users have copper-based connections that cannot reach those speeds.

TPG Telecom said the proposed SAU price changes “will lead to significant changes in the wholesale and retail broadband markets.”

It added that there are “a number of unknowns” about how some aspects of the price proposal will work.

NBN Co added to this last week by declaring its pricing proposal to be a bundled offering, where price increases at the 50Mbps tier effectively subsidize better quality of service for users above 100Mbps.

TPG Telecom made its convergence comments as part of an investigation into the conditions required by non-NBN operators for fixed-line infrastructure-based competition with NBN Co. TPG Telecom Predicts NBN 50Mbps and 100Mbps Price Convergence – Telco/ISP

Callan Tansill

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