Techradar has reported that new cheaper NBN plans could be on their way before Christmas following consultation between NBN Co and the Australian Competition and Consumer Commission (ACCC):
While consumers may think the problem of pricing lies with the ISP they’ve signed up with, the issue starts with NBN Co, who charge the providers a wholesale price. The proposal looks to lower that wholesale price which, in turn, will allow retailers to pass on cheaper plans to customers…
NBN Co’s plan follows extensive consultation with the ACCC, and looks to lower the wholesale price of the NBN, which will allow retailers to pass on cheaper plans to customers…
It’s not yet clear how a new pricing structure would benefit the end user, but the proposal includes changing the rebate from a one-off payment to a daily rate, which consumers will be eligible for when they face late connections and fault repairs…
If the proposed changes are approved by the ACCC, they’ll come into effect by the end of the year, giving more Australians access to affordable high-speed internet.
These changes, which haven’t even been properly defined, amount to tinkering at the margins and do not resolve the fundamental structural reasons behind the NBN’s exorbitant wholesale pricing.
The NBN’s wholesale prices have been set at a high level because the former Rudd government classified the project as an “investment”, which necessarily requires it to deliver a commercial return. This meant the NBN must cover its costs in addition to earn a margin on top, which necessarily forces it to charge ISPs high wholesale prices, which are then passed onto Australian consumers.
The ultimate solution for the NBN’s high cost is for the federal government to write down the value of the project to reflect its true value.
The Parliamentary Budget Office recently reported the “fair value” (or saleable value) of the NBN at just $8.7 billion, which is less than one-third of the government’s equity investment. By extension, the NBN requires a writedown in the order of $20 billion.
Writing down the NBN would lower the project’s required rate of return and enable NBN Co to lower wholesale prices for ISPs and by extension Australian consumers.
Ultimately, the federal government needs to treat the NBN as an essential utility service, rather than a commercial project seeking a commercial rate of return.
Until it does so, Australians will continue to be overcharged for substandard broadband.