NBN: Can we kill the pricing myth, please?

I’m in the middle of writing up a larger NBN piece right now, and I keep coming across the same damned fairy tale every time, relating to the cost of actually having an NBN connection. Can’t we slay this ogre once and for all?
Now, I’m not talking here about the highly contentious issue of what it’ll cost for a fibre pull if you end up on a FTTN connection presuming a change of Government in September — because nobody seems to know. Nor am I talking about what “free” means in terms of a connection. The Wumpus did a nice job covering that one off for me already, anyway.
No, instead, I’m talking about the fallacy that FTTP NBN connections are going to send those poor middle class Aussie battlers broke, because they’ll cost so very much more than they’re paying for broadband connections right now.
It comes up again and again and again and… it’s driving me more than a little crazy.
So how about we look at some actual numbers, instead of falling back on the lazy rhetoric, shall we?
I’ll pick out three plans — low, mid and heavy usage — and compare what you’ll pay right now for a connection.
I’ve listed the speeds for each NBN plan, and for ADSL2+, the phrase “variable speeds”. It’s not that NBN speeds can’t vary; clearly the relationship between the server and client plays a role there. It’s simply that there’s no distance differential for NBN fibre services, whereas ADSL2+ achievable speeds drop quickly the further you are from the exchange. The top ceiling is technically 24Mbps, but you’d pretty much have to live in the exchange to get that; in reality you’re perhaps looking around the entry level of current NBN plans over time for most ADSL2+ plans at best, and quite a lot worse the further out you go. The same is true, by the way, for FTTN services, but to go down that rabbit hole will get me off-track, so I won’t.
I’ll pick plans from NBN ISPs (makes sense, surely), but switch up ISPs to bring a broad range of figures into play. As should become obvious, I actually shouldn’t need to, but I’m sure if I just listed one ISP, somebody would complain. I’m also assuming that you can get ADSL2+ services for what that’s worth; it becomes more complex with only ADSL factored in, but frankly, the value switches over to NBN connections even more rapidly in those cases. Don’t even get me started on wireless data costs.

Entry level

ISP: iiNet
ADSL2+ Plan: Home-1 20GB, variable speeds, $39.95/month
NBN Plan: NBN-1 (Light Users) 20GB/20GB (peak/offpeak), 12/1Mbps $49.95/month
Yes, I can see there’s a $10 price difference. There’s also a data difference — in favour of the NBN plan — and a cost saving if you’re throwing in a phone line, which you’d need to do for this particular ADSL2+ plan. Add in phone bundling and that ADSL2+ plan is $59.90. Add in a Nodephone VoIP service with NBN, and it’s… $59.90. With a more reliable fibre download and upload speed that doesn’t vary by distance, and cheaper excess usage fees.
Not feeling ripped off here by NBN plans. Let’s move up the scale, shall we?

Mid level

ISP: Exetel
ADSL2+: AZ-A $60, 1000GB anytime, variable speeds, $60/month
NBN Plan: NBN2-150 150GB Peak/Unmetered off-peak, 25/5Mbps $54.50/month
Here we get an interesting comparison, because Exetel bundle phone services for both its NBN and ADSL2+ services, and you do on paper get more data allowance with an ADSL2+ service, although that’s weighed against the completely unmetered off-peak allowance of the NBN plan… which is still cheaper.
Nobody’s worse off here. How about for the heavy volume users?

High level

ISP: iPrimus
ADSL2+ Plan: No Worries Platinum Unlimited Data, variable speeds, $129.95/month
NBN Plan: No Worries Fibre MAX Intense No Worries 100/40, $149/month
Yes, iPrimus has silly plan names. That aside, on first glance, you might say that the “unlimited” ADSL2+ plan is much better, because $149 is more than $129. Except that in this case — and I genuinely have just plucked out plans at random here — the first six months of the NBN plan only costs $74.50.
Add up the total contract costs, and the NBN plan comes in at a total of $3129 versus $3118.80 for the ADSL2+ plan. Or a little over a cent a day for a plan that delivers speeds that you will never get out of ADSL2+ in an environment where competition is only going to rise. I could chop an easy $50/month off that NBN plan, by the way, switching back to iiNet, but as I said, I wanted to mix up ISPs randomly to see what the broad competitive picture is like. Still, if I do, the significantly faster NBN plan is significantly cheaper.
So, will NBN plans cost a huge amount more than you’re paying for broadband right now?
Nope. I just can’t see it, and if you want a final death blow to this particularly silly argument, it’s the fact that right now, the NBN is still being rolled out, and as such, the price competition for NBN services just isn’t that strong. There are few players out there offering unlimited bundles — but that will come. One of the purported benefits of a nationalised broadband network is that it removes the competitive disadvantage for smaller players, leading to more competition. Simple economics suggest that we’ll see more competition the NBN space in coming years, which should lead to lower prices. Given they’re already comparable for better services, that’s only going to be a good thing.
Image: Gavin St. Ours

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