Soaring demand from COVID-19 home workers and learners could prove beneficial for NBN Co, which could finally boost limp revenue growth with faster, more expensive broadband plans – just months after Telstra stopped selling 100Mbps plans it said the network cannot deliver.
The new tiers – which include 100Mbps/20Mbps nbn Home Fast, 250Mbps/25Mbps Home Superfast and 500-1000/50Mbps nbn Home Ultrafast – substantially expand the speeds available to the network’s 7.1m active customers.
Superfast speeds are available to around 32 per cent of the 11.4m premises that are ready to connect to the NBN, the company said, while Ultrafast speeds – which range from 500Mbps to 1Gbps depending on access technology – are available to 18 per cent of the premises that are ready to connect to the network.
The new plans mean over 5.5m Australian households and businesses could soon be funnelling data at more than twice the maximum speeds that have been available over the network to date.
NBN Co had already noted 23 per cent of customers upgrading their plans in the last 12 months – but with usage surging during the COVID-19 lockdown, that equation is changing rapidly.
Usage during the week of 18 May was up 51 per cent compared to the pre COVID-19 baseline, and the multiplier effect from the new plans – as users celebrate their faster services by embracing more bandwidth-hungry applications – could drive yet another surge in consumption.
A boost at last
Widespread takeup of faster plans could be a turning point in the debt-laden company’s commercial case – which has long compromised its value as a potential private-sector acquisition target.
To be commercially appealing enough for a mooted acquisition, the network needs an opportunity for revenue growth.
However, limited opportunities for service differentiation mean average revenue per user (ARPU) – a key measure of revenues from sale of wholesale broadband services – has long held steady at around $45 per customer per month.
This has kept revenue growing linearly as the rollout progresses, but prevented NBN Co from accelerating its revenue growth by increasing ARPU: last year, NBN Co projected that ARPU would creep up from $44 in fiscal 2019 to $49 in fiscal 2023.
The new plans could accelerate that growth, potentially nearly doubling ARPU if a large number of consumers sign on for the top-tier plans.
The Home Superfast plan will cost retail service providers $68 per connection per month, while the Home Ultrafast plan will generate $80 per connection per month using the same customer equipment that is currently providing just $45.
From pandemic to privatisation
With two-thirds of Australians expecting to extend their work-from-home arrangements temporarily – and, in some cases, permanently – strong take-up of the new plans could finally move the dial for NBN Co by delivering a financial story appealing enough to drive a potential takeover by Telstra or another company.
Just 7 per cent of HFC customers will initially get access to Ultrafast services as NBN monitors usage patterns and tweaks its network configuration.
However, the promise of growing long-term returns could sell the network to a buyer willing to invest in infrastructure to extend the reach of superfast services to what will soon be 12m premises.
NBN Co recently secured some $6.1b in new credit, which would support network upgrades that would extend the higher-ARPU new services to more premises.
Minister for Communications, Cyber Safety and the Arts Paul Fletcher had previously ruled out selling the NBN to Telstra, but set tongues wagging just days before NBN Co’s latest announcement when he said the network had proved itself during the COVID-19 lockdown.
The new plans are part of NBN Co’s two-year roadmap and are, Fletcher said in a statement, “evidence of the NBN’s substantial capacity and flexibility to deliver services to meet the current and future needs of its users”.
In anticipation, NBN Co has overprovisioned its existing speed tiers to compensate for protocol overheads that, it says, are keeping existing customers from achieving their services’ rated speeds.
Yet the new high-speed plans distract from persistent problems for customers on older legacy last-mile technologies.
In February, Telstra stopped selling 100Mbps plans over fibre-to-the-basement (FTTB), -node (FTTN), and -curb (FTTC) services in a move that saw critics suggest the NBN was already at “breaking point”.
Speeding services to FTTP and HFC customers, while leaving the other half of Australian premises with best-effort broadband, will exacerbate the digital divide that has split the NBN’s user base into digital ‘haves’ and ‘have-nots’.
