nbn co can create its own demand for 100 Mbps
If nbn co is serious about driving adoption of high-speed broadband and capturing as many customers as possible the company should deliver a high-speed broadband service at a price consumers are actually willing to pay, according to telecoms analyst Paul Budde.
In a blog post, Budde argued that consumers have consistently shown that there are clear limits to the prices they are willing to pay for their monthly broadband connection, with the median price being in the range of $60 to $90.
This limitation exists regardless of the cost of the operator to build networks or the speeds of services provided, Budde said.
“In the case of the nbn, further confusion is added because of political interference, and because of that we now have a second-rate fixed broadband network that costs too much to deliver a good quality broadband at an acceptable end-user price,” he said.
“So in order to make ends meet, nbn co throttled the service in an effort to force customers to pay more for better quality services, but it has become clear that customers were not biting.”
While nbn co’s recent decision to change access to virtual circuit prices so that a 50 Mbps wholesale connection costs the same as the prior entry-level 25 Mbps connection is a “very good first step”, the company also has to deal with the portion of the population who solely use mobile and wireless broadband, Budde said.
While this proportion has remained roughly stable at around 15% for the past decade, Budde estimates that up to 30% of the population are in a position to effectively use mobile or wireless broadband only.
In response to these factors, nbn co should introduce a 100 Mbps broadband service at a price point customers are prepared to pay, Budde said.
“This would stimulate not only the use of high-speed services, but also it would stimulate content and service providers to develop applications that are well suited for such a high-quality infrastructure. Customers would be attracted by such services, as they were when Netflix arrived, and that would guarantee the success of the nbn,” he said.
“When customers realise that affordable, good-quality high-speed broadband will be delivered by the nbn, first of all there will not be an increase of the 15% of people that are currently mobile-only users, but they would also be able to entice some of those customers back into the fold of the nbn, as they will see the value of those new high-speed broadband services that would be too costly to use over a mobile connection.”
Once 5G rollouts begin in earnest between 2020 and 2025, nbn co will have a big competition fight on their hands if they have not addressed this issue, Budde warned.
“If the nbn gets it wrong a true financial disaster will be looming as the 30% scenario becomes a very viable one. However, if they get it right the future will be on their side. Ubiquitous, affordable high-quality broadband will most certainly see the development of e-health, e-education and other high-quality government, community and business services.”
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