TPG Telecom predicts NBN 50Mbps and 100Mbps price convergence – Telco/ISP

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

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

“Under the SAU variation proposal, NBN Co is proposing to immediately increase prices for the 50/20 Mbps speed tier,” the telco said.

“TPG Telecom’s preliminary analysis shows the SAU variation proposal could see the average cost for the 50/20 Mbps speed tier being the same as the 100/20 Mbps speed tier within one year, thereby rendering the 50/20 Mbps speed tier obsolete over time and removing any reasonable price relativity between these two products.”

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

The company previously priced 25Mbps and 50Mbps services the same to encourage mass adoption of 50Mbps.

More recently, it has used inducements such as six months of free upgrades to higher speed tiers – a kind of ‘try-before-you-buy’ offer – to get more users off the lower speed tiers.

However, it still faces some constraints in enabling this kind of mass migration to 100Mbps, given some users have copper-based connections that cannot achieve these speeds.

TPG Telecom said that the proposed SAU prices changes “will result in material changes in the wholesale and retail broadband markets.” 

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

NBN Co added to that in the past week by declaring its pricing proposal to be a package deal, with price rises on the 50Mbps tier effectively subsidising better service quality for 100Mbps-plus users.

TPG Telecom made its convergence comments as part of an inquiry into conditions imposed on non-NBN operators for fixed-line infrastructure-based competition with NBN Co.

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