Business Analysis

Better prices and services needed for NBN Co to stay competitive

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NBN Co needs to shape up in the face of serious competition (Screenshot via YouTube)

Up against fierce competition, NBN Co needs to improve its quality and pricing structure in order to remain economically viable. Paul Budde reports.

*Also listen to the audio version of this article on Spotify HERE.

LAST WEEK, we covered the Special Access Undertaking Variation that NBN Co presented to the Australian Competition and Consumer Commission (ACCC). The major news here was that this resulted in a $30 billion write-down of the losses that the NBN occurred during the rollout of its infrastructure.

However, interestingly, its submission also included supporting documentation to which I was alluded by articles in Communications Day.

I was rather surprised about the candidness of the information provided by NBN Co in its documentation. The reason is that it was provided in order to lobby the ACCC not to regulate the company as a monopoly.

What becomes clear from the data the company has provided is that the NBN is receiving fierce competition from alternative services offered by its competitors, especially from their wireless service offerings. The company admits that its service in those situations is not up to scratch and/or is too expensive.

I would say that this is clearly because the company has behaved like a monopolist and hasn’t listened to its customers. Of course, first of all, there is the legacy from the previous Government that it is saddled with a second-rate network, especially in relation to its Fibre to the Node network. However, where it does have enough capacity, rather than making that capacity available at affordable prices it has priced it so high that that part of the network is underused.

The company admits that it has to start addressing these issues, through lower prices and better services. It will be interesting to see if that is indeed going to happen.

In all reality, it will have to start competing in order to remain economically viable. Its current overall market share of the residential broadband market is 68%. However, in areas of competition that drops to 62%. This is a far cry from the initial goal of close to a 90-100% market share based on a national Fibre to the Home network.

Even if the NBN starts lifting its game, it will be hard to claw back lost market share as the competition has been able to establish a solid foothold in the market. Nevertheless, if it indeed becomes more competitive in price and quality (speed), it will be able to increase its market share in cities and towns. In large densely populated areas, a Fibre to the Home network can always win over wireless service, especially on price.

Some of the data from the NBN reporting:

  • 2.9 million premises are not connected to the NBN — 2.4 million of them are using wireless alternatives;
  • only 45% of the customers surveyed thought the NBN service was worth the cost;
  • an estimated 320,000 customers are using fixed wireless services from Optus and TPG;
  • competing fixed networks from TPG, Swoop, FSG, Pentanet and Superloop continue to see an increase in their customer numbers;
  • LEO (low Earth orbit) satellites are also seen as an upcoming competition force; and
  • the company is also struggling in multi-dwelling units, where on average only 41% of apartments are connected to the NBN.

In the meantime, the ACCC issued its half-yearly Internet Activity Report for the first half of 2022. No less than 770,000 new mobile services were connected, bringing its total to 28 million. Of this, 4.4 million are mobile broadband connections, furthermore confirming the data mentioned above.

The NBN saw further decreases in its 100+ and 250Mps services. As we have mentioned before indications are that the high price for these services is a key reason for the decline. This at times when it would be beneficial for both our society and our economy if proper high-speed services were used by more people.

Finally, the enormous increase in the use of mobile services put a huge strain on the infrastructure as more and more towers are needed. Many organisations and cities are looking for alternatives such as streetlights, bus shelters advertising displays and other street furniture. This was also recently discussed in Australia.

However, a note of warning from my colleagues at Smart City Amsterdam. They reported significant problems as street furniture and streetlights sometimes need to be removed for road or other city works. These disruptions have become a major headache for mobile operators, especially as communication between the various organisations is not always optimal.

*This article is also available on audio here:

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

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