Households face a price hike of nearly 20 per cent on internet services, on average, as they are required to sign up to the National Broadband Network when it arrives in their neighbourhood and the existing service is switched off.
The NBN is starting to make inroads into the capital cities, with construction in Sydney, the nation’s biggest consumer market, to begin later this year.
Until now the more than 70 per cent of NBN’s rollout happened in regional and rural areas, but the switch to the metro will gather pace this year, especially if the company rolling out the network, NBN Co, wants to hit its target of having 5.4 million premises ready to receive a service by June 30.
NBN Co has spent $22 billion on the project so far and with the Coalition government lending the company an extra $19.5bn in November, it has the money to complete the rollout. But with users required to move to an NBN service, there are concerns about prices they may pay for services that may not be that much better than their existing ADSL set-up.
Ovum principal analyst Craig Skinner said consumers should avoid paying for more than what they need for NBN services and shop around retailers before entering into a long-term contract.
“Unless you’re watching multiple videos at once, you don’t need a higher speed. Unless you have a large family you shouldn’t need to pay more,” Mr Skinner said.
Technology research firm Telsyte’s managing director Foad Fadaghi said while research showed that consumers were prepared to pay more for the NBN, they expected more.
“Our research has shown that the average price of plans this year has come down, but the expectation of what people expect to pay in future is actually up on previous years,” he said.
The high prices currently charged by NBN Co for wholesale access is also seen as a problem, with retail service providers looking to pass some of the cost on to consumers.
Critics of the mixed technology NBN say that a reliance on Telstra’s copper is likely to leave many homes paying more for a sub-standard service.
A NBN spokeswoman declined to discuss specific pricing packages, but said there were a range of affordable broadband plans and speed tiers available on the network.
“As a wholesaler, NBN offers a pricing structure that allows retail service providers to develop plans that best suit their customers’ needs,” the NBN spokeswoman said.
Figures calculated by The Australian show that the average users of four popular services are likely to pay 17 per cent more as they are switched over to the NBN.
In one case, TPG’s standard ADSL plan jumps 36 per cent to $79.99 a month as it switched over to a directly comparable NBN plan. While both plans offer unlimited downloads, the NBN plan promises faster speeds.
Even so, the TPG plan is lower than Telstra’s basics deal of $99 a month, with a cap of 1000 gigabyte (1 terabyte) download. A comparable ADSL plan by Telstra retails at $90 a month.
As more consumers are required to switch to the NBN, the Australian Competition & Consumer Commission warned that it will scrutinise contracts on offer.
ACCC chairman Rod Sims said most “consumers believe they aren’t getting what they sign up for, and pay for, when it comes to home internet speeds”.
According to the ACCC, the NBN will require particular attention as the network becomes more widely available to consumers.
“The migration of services to next generation broadband networks will support greater diversity in the broadband speeds that are available to consumers, depending on their choice of service providers and plan, as well as providing opportunities for them to better inform consumers about the speeds that they typically deliver on their broadband plans,” the ACCC said.
While NBN plans are different from ADSL offers, some providers offer a budget deal on the NBN. An entry level Exetel NBN plan, for example, starts at $39.99/month for 100GB at up to 12Mbps download. With unlimited data, an Exetel 25Mbps plan is $69.99 per month.
Before households sign up to the NBN they can expect a notice from NBN Co that their area is ready for installation, although this becomes obvious with installation of fibre in the neighbourhood, and new NBN nodes. NBN assigns an installer, whose job is to connect the NBN from the street into your premises.
In the case of fibre to the premises, that could mean laying new fibre cable. In other homes and apartment complexes, it may mean connecting the NBN to the existing copper network and installing a new NBN-compatible modem inside the premises.
Where full installations occur, consumers should ensure the new NBN modem is placed centrally so that an attached router offers the broadest wireless connectivity. Some installers try to minimise the connection distance, with the access point at the corner of the home.
Once NBN notifies customers of a coming installation, retailers such as Telstra, Optus, TPG, iiNet, and Exetel begin fighting for your business. Expect to see brochures in the letterbox, even calls to sign you up and get you aboard.
A Telstra spokesman said in areas where the NBN is coming, it contacts all its existing customers, and potential customers. “When it does go live, we organise activities in shopping centres, and town hall meetings.
“The majority of our customers will receive a call to tell them that the NBN is available. In the case of fibre-to-the-node, if they are an NBN ready plan, we send them a modem. All they need to do is plug it in and they’re on the NBN once the work is completed.”
In apartments, some savvy users opt for a high-speed, unlimited data plan which they share with a neighbour through a wireless bridge connection — and halve the cost. That comes to less than $50 per month for unlimited, top-speed NBN for each.
Once on the NBN households may be spoiled for choice on broadband plans but it pays to look carefully at the deals on offer and maybe initially try a month-by-month plan before committing to a long-term contract.