Oh no! NBN speeds are set to become an even bigger mess

Jacqui Dent - Editorial Strategist

Last updated 18 September 2019

Tired looking woman stares at laptop in confusion

Yesterday, NBN Co proposed a host of changes to its wholesale pricing model, designed to improve speeds, introduce higher speed tier options, and keep down costs for both telcos and their customers.

But while the resulting changes could lead to more affordable NBN plans, they could also see the number of speed tiers that customers have to choose from jump from an already confusing four options to a mind-boggling seven.

There's a lot to unpack in the new proposed changes, so bear with us here. Currently, customers choosing an NBN plan have four major options to choose from:

The numbers in each tier refer to the maximum download and upload speeds that each connection can achieve. For example, on an NBN Basic plan your maximum download speeds are 12Mbps, whereas your maximum upload speeds are 1Mbps.

Under the NBN's new plan, customers could potentially be choosing between seven different options. We've bolded the three new ones:

NBN 12/1
NBN 25/5
NBN 50/20
NBN 100/20
NBN 100/40
NBN 250/25
NBN 1000/50

If you're feeling confused, we don't blame you. Many Australians are already struggling to get their heads around four speed tiers. Seven feels like way too many, and the fact that upload speeds slow down on the faster NBN 250 speed tier is just bizarre.

Cheaper NBN plans

On top of the extra speed tiers, NBN Co is proposing to make the business of selling NBN plans more affordable for telcos, by changing the pricing and capacity on what the industry calls CVC.

Without getting too technical, CVC is essentially a unit of capacity that NBN Co sells to telcos. The higher the capacity and the lower the cost per CVC unit, the cheaper it is for telcos to supply affordable plans to customers at scale, without running into prime time congestion issues - commonly known in the industry as evening speeds.

Essentially, plans could become faster and cheaper, although how much faster and how much cheaper depends on individual NBN providers.

NBN Co proposes to make these changes incrementally between October 2019 and May 2021. All four existing speed tiers on the NBN have been ear-marked for either increased capacity, discounting, or both. And the three new speed tiers will also see CVC increases over time.

This is great news for customers and telcos, who have been increasingly loud in calling for changes to the NBN pricing model.

New faster plan options

As well as making changes to existing NBN plans, NBN has three new speed tiers on the table. The first is essentially a light version of the existing speed tier known as NBN 100.

Whereas currently customers have the option to buy an NBN plan with a max download speed of 100 Mbps and a max upload speed of 40Mbps, the new speed tier would allow customers to choose to max upload speeds at 20Mbps instead. NBN Co would sell this speed tier at a cheaper price to telcos, who would then have the option to pass those savings on to customers.

Currently, NBN 100 plan pricing ranges between $85 and $120 per month, excluding temporary promotional pricing offers, so NBN 100 "Lite" could make those super-fast download speeds more attainable for more Australians. Although, two upload speed tier options will undoubtedly introduce even more confusion into an already complicated model.

Meanwhile, two new speed tiers could be coming with max download speeds of 250Mbps and 1,000Mbps. However, while faster speeds on the NBN is undoubtedly good news, only between 31% - 54% of Australian premises will have NBN connections that are physically capable of achieving those speeds.

NBN customers with Fibre to the Premises (FTTP) and Fibre to the Curb (FTTC) will be able to enjoy the full benefits of NBN 250 or NBN 1,000, as well as some NBN customers with HFC. The rest of Australians who are on Fibre to the Node (FTTN), Fibre to the Building (FTTB), Fixed Wireless or Satellite, will simply have to miss out, unless the network is upgraded.

NBN Co argues that introducing these high speed plans will benefit everyone on the network, because carriers can take leftover CVC from high speed tiers and pass on the capacity, and the savings, to customers on lower speed plans. However, more capacity on the network will not help the 183,000 FTTN users whose connection download speeds can't reach 25Mbps. The most it could do is lower prices so that plan costs more accurately reflect the low quality of service.

NBN 12 and NBN 25 to make a comeback

At the same time that NBN announced faster plans potentially in the works, it also proposed two seemingly retrograde steps. NBN 25 wholesale pricing may be discounted to make it more "economically attractive" for telcos and their customers. And meanwhile there will be cuts to the incremental pricing of NBN 12 to accommodate price-sensitive "higher data users" on these plans.

These potential changes are a backflip on NBN Co's previous attempts to phase out these two speed tiers by discounting NBN 50 plans in December 2017 and increasing the cost of NBN 12 plans earlier this year.

Essentially, NBN speed tiers continue to be a mess, and there is no sign of their getting any less muddy any time soon. Many have suggested that the simplest solution would be to simply abolish CVC and speed tiers altogether.

However, Chief Customer Officer Residential at NBN Co, Brad Whitcomb has ruled out this step. "While we know that some RSPs have called for the removal of CVC charges, the reality is that there is a real cost in provisioning and dimensioning the network to accommodate rising data consumption. We believe our bundled charges are the fairest way to implement a user-pays approach to wholesale pricing at this time."

Of course, NBN Co refers to all changes as "proposed" or "subject to consultation with the industry". We'll await to hear how many of them come to fruit. You can read NBN Co's full statement on its website.

If you're confused about how NBN speeds work in action, check out our video:

Jacqui Dent

Editorial Strategist

Jacqui Dent is an Editorial Content Strategist at WhistleOut Australia, where she writes about mobile phone plans, NBN plans and everything in between. Over her ten-year career, she has worked to provide informed advice to the public, first in the sphere of writing and now in the world of consumer tech. Jacqui has also written about consumer telco products for Business Insider, Pedestrian and the 50Up Club.

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