NBN 12 plans deserve a swift, merciless death

Alex Choros - Managing Editor + Group Telco Editor

Last updated 05 August 2019

NBN 12 plans are the scourge of Australian internet. They cost about 75% as much as NBN 100 plans, but offer 12% of the performance. They're expensive, they're bad value, and providers can't deliver them at a price that makes sense for consumers. They should be rotting at the bottom of a lake. Or in an iron maiden.

More so, NBN 12 plans are a symptom of everything that's wrong with NBN pricing, which once again dominated last week's tech news cycle. It's a conversation that's happened before, it's a conversation that will almost certainly happen again, but there's a clear consensus: NBN plans cost too much.

Providers such as Vodafone and Vocus (parent company of Dodo and iPrimus) want NBN wholesale pricing cut. Anyone selling an NBN plan first buys it from NBN Co, and what they pay is made up of two components: a flat fee for access, and variable capacity-based pricing, which is also known as CVC. In the case of Vodafone and Vocus, they’d love to see NBN Co ditch CVC.

To make an NBN plan affordable, telcos have to find the right balance between how much CVC they buy and how much they charge you to access it. Purchase too little, and your customers will experience congestion during peak hours. Purchase too much, and you won't make money selling your plan or be able to keep it priced competitively.

The main reason CVC exists is NBN Co’s bottom line. Capacity on the NBN isn't limited, it's not like a road with a set number of lanes. But by charging for access, it essentially becomes one. It's artificial scarcity for the sake of profit, and telcos aren't loving it.

Telstra CEO, Andy Penn, went even further when it came to his critique of NBN pricing. On top of axing capacity based pricing, he argued that NBN should drop the wholesale price of NBN 50 and NBN 100 plans by around $20.

(It is of course worth remembering that NBN Co pays Telstra about $1 billion per year for the use of Telstra infrastructure. If Telstra is serious about cheaper NBN pricing and "social returns", it could always let this slide, but that's a conversation for another time.)

ACCC chairman Rod Sims also had two cents to add. He'd like to force NBN Co to offer more affordable NBN 12 plans. Recent NBN wholesale changes have made it impossible for providers to sell NBN 12 plans without raising prices or increasing congestion for customers. Optus says it’s now paying NBN Co "millions" of dollars extra on a monthly basis in order to keep serving customers on existing NBN 12 plans even though it no longer sells NBN 12 plans. Many other telcos have stopped offering NBN 12 plans altogether.

In the case of telcos that still offer NBN 12 plans, prices have risen to around $59 per month for unlimited data. That's almost identical to what you'll pay for an unlimited NBN 50 plan. For comparison, unlimited data ADSL plans can be as cheap as $30 per month (excluding line rental), but are more commonly found at $49 per month.

Accessible NBN pricing is important, and in some ways, ACCC intervention bringing internet prices down would be a good thing. But instead of making NBN 12 plans cheaper, we should bury the cursed speed tier once and for all. NBN 12 plans have no right to exist in 2019.

Andy Penn is right in this situation. Why not cut NBN 50 prices? What's the point of building a nationwide broadband network if you're still going to peddle ADSL speeds?

It's an important conversation to have, because internet access is just as vital as water and electricity in a modern society. Internet access is not a luxury. Fast internet access isn't a luxury either. It's a cornerstone of life in 2019; we rely on connectivity for so much of our modern existence. Can you imagine paying for a "Standard Plus" or "Premium" water plan just to have a decent shower? What if you had to pay extra to drive at top speeds on a new road?

Instead of being considered a luxury, the NBN should be treated more like a road or public transport, something that's there for public good. After all, the internet is an information super highway. Much like tolls or train tickets, charging for access to the NBN makes sense. But fast internet access should be affordable for everyone, regardless of circumstances. Let's stop thinking of the NBN as something that has to make a profit and start treating it as the utility it is.

Alex Choros

Managing Editor + Group Telco Editor | X | Instagram | Threads | LinkedIn

Alex Choros is the Managing Editor of WhistleOut Australia and an award-winning journalist. He's been writing about consumer technology for over a decade and is an expert on the Australian telco sector, to the point where he knows far too many phone and internet plans by heart. In addition to leading the WhistleOut editorial team, Alex is responsible for ruining the office Sonos with his troubled taste in music.

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