Entry level broadband and the digital divide

The ACCC warns telcos against underselling low-speed tiers as wholesale costs rise and FWA creates a price-competitive niche.

Heath Gibson · Executive Manager – Industry Intelligence and Insights at NBN Australia10 May 2024Period: Q3 FY244 min read

$2.45pm↑

Wholesale price increase for Home Basic 1 (July 2024)

$54.99→

TPG 4G Home Wireless monthly price point (2022-2024)

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Companies covered:

Abstract

This report analyses the ACCC's increasing focus on the availability and affordability of entry-level NBN plans. With wholesale price increases of $2.45pm for Home Basic 1 and $2.24pm for Home Basic 2 effective from July 2024, regulators are concerned that RSPs may be withdrawing low-speed tiers or misrepresenting their capabilities to push consumers toward more expensive high-speed plans. The brief evaluates Fixed Wireless Access (FWA) as a market alternative and discusses policy options like consumer vouchers to bridge the widening digital divide.

Key Takeaways

The ACCC is monitoring RSPs to ensure they do not undersell the capabilities of lower speed tiers to drive high-speed plan take-up.
Wholesale price hikes of $2.45pm for 12/1 Mbps and $2.24pm for 25/5 Mbps plans will impact retail affordability from July 2024.
Several major RSPs, including Optus and Vodafone, have stopped marketing 'Basic 1' NBN plans entirely.

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Frequently Asked Questions

The ACCC is concerned that providers are misrepresenting the capabilities of budget tiers to force customers onto more expensive high-speed options. This scrutiny follows wholesale price increases of $2.45 per month for Home Basic 1 and $2.24 per month for Home Basic 2 effective July 2024.

Market leaders including Optus and Vodafone have already ceased marketing 'Basic 1' NBN plans to new customers. This retreat is driven by margin pressure, as seen in Aussie Broadband's decision to raise retail prices for basic tiers by $6 during FY24.

Fixed Wireless Access (FWA) is the primary competitive threat, with TPG maintaining a consistent $54.99 price point for 4G Home Wireless since 2022. While NBN entry costs climb, FWA providers are holding retail prices between $55 and $60, capturing users priced out of the NBN ecosystem.

NBN Co’s plan to boost the 'fast' tier to 500 Mbps risks alienating the budget-constrained segment of the market. Without intervention, such as the proposed technology-neutral consumer vouchers, the July 2024 wholesale hikes will likely accelerate the migration of low-income households away from fixed-line services.

Entry level broadband and the digital divide

Abstract

Key Takeaways

Frequently Asked Questions

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