Affordable retail pricing on the NBN

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Editor JTDE

Keywords

NBN

Abstract

The National Broadband Network (NBN) has the potential to transform economic and social relations. But realising that potential requires universal take-up and significant utilisation of the NBN. This paper examines how NBN wholesale pricing can help to do this. It introduces a mark-up concept to build a bridge between wholesale and retail prices, provides a yard-stick for how we might define affordable retail pricing and suggests how an entry level wholesale price can be specified to deliver that and enable low income customers to access the NBN.


 

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References

The Age, 18 July 2008 reports Maha Krishnapillai of Optus telling AAP that a high-speed broadband network could cost consumers between $32.50 and $105 pm … with a wholesale rate between $25 and $75 pm per customer allowing a return on capital of about 12% pa… Retail prices would be set at 30 to 40 per cent above the wholesale price.
Revenues reported in Telstra accounts do not include GST.
Some “best-fit” results for September 2012 are shown in Figure 4 of this paper. Results for earlier years used in Figure 1 are taken from Table 6 of de Ridder’s “NBN pricing should be rejected”, a submission to the ACCC on the NBN SAU in December 2012; available at www.deridder.com.au. As the retail plans include GST, this is backed-out before estimating the mark-up shown in the dotted red line.
See de Ridder’s “NBN Comments on ARPU and the ICRA” (April 2013) and “NBN – Internal rate of return” (March 2013)
Wholesale cost of $26 used (and in Table 2) from NBN Co. case study for 12/1 which cites $25.82 pm at p33, Product and Pricing overview, December 2010. TPG only provides (Telstra) fibre in Brisbane exchange area.
See de Ridder’s “NBN pricing discriminates against smaller players” (May 2013) and “CVCs – A final (?) word” (July 2013) at www.deridder.com.au
). Queensland, New South Wales and South Australia each have 11?12 electricity retailers and 3 to 6 gas retailers; see http://tinyurl.com/mj32bb4
Essential Service Commission, Retailer Margins in Victoria’s Electricity Market, Discussion Paper, May 2013
ABS Cat 8146, 15 December 2011
The ARC Centre of Excellence for Creative Industries and Innovation (CCi) based at Swinburne University of Technology. http://www.cci.edu.au/projects/digital-futures
Analysys Mason, Bridging the digital divide: connecting the unconnected, 8 July 2013 at http://tinyurl.com/lxoq4wt
The shares of income for Germany, France and the UK are lower than for Figure 2 looks at the total cost of ownership and Figure 3 looks only at the monthly fee for the cheapest broadband plan in the market.
(1.49-0.84)*4*9m households
ABS Cat 4102 shows 3.9% of households in public housing in 2010. http://www.abs.gov.au/ausstats/abs@.nsf/mf/4102.0
Rogers Communications, 13 June 2013 at http://tinyurl.com/lm335ms
LITE home internet gives 8Mbps/256Kbps and 20GBpm http://www.rogers.com/web/link/hispeedBrowseFlowDefaultPlans
Canadian GNI is C$39,710
http://www.digitalinclusion.net.au/
The Point Topic measure is relative to national GNI per capita. Obviously, the percentage is higher relative to the incomes of the target group. Australia’s GNI is $40,270 pa
The first line is from page 7 of “Who is missing out”, ACOSS Paper Number 187, March 2012 at http://acoss.org.au/images/uploads/Missing_Out_2012_ACOSS.pdf and the rest is taken from Table 1 “Affordable broadband for all Australians”, 2012, by Robert Morsillo and published in the Telecommunications Journal of Australia, Volume 62, Number 5.
This is discussed in de Ridder’s Submission to the ACCC on the NBN SAU, December 2012.
Of course, while the constraint on speed was traditionally in the access network it will now be in the customer equipment or backhaul or some other choke-point. But it would no longer be the access network.
NBN Co. current wholesale prices are also shown in red. The step changes are due to CVC pricing.
http://ispspeedindex.netflix.com/usa
Morsillo, R, “Affordable broadband for all Australians”, in Telecommunications Journal of Australia, Vol. 62, Number 5, 2012. http://doi.org/10.7790/tja.v62i5.363
There were 282,000 customers still on dial-up at Dec 2012; down from 463,000 a year earlier.
Telstra is obliged to provide an affordable voice service on the NBN – see http://www.dbcde.gov.au/telephone_services/information_for_people_with_special_needs
http://telstra.com.au/customer-terms/home-family/services-on-the-nbn/