NBN Co says almost one-third of users on the wrong plan

NBN Co claims almost one in three NBN users is effectively on the wrong plan, one that is too small for their needs based on their bandwidth consumption habits.

The company revealed the statistics - drawn from internal data - in a follow-up submission [pdf] to the ACCC that was published yesterday.

Though most submissions to the ACCC review process are now moot, due to the restart of the process, a pair of NBN Co submissions provide some interesting data points.

The company’s main submission offers data on what NBN Co calls “maximum utilisation”, a measure it uses to check whether or not end users’ chosen speed tier plans match their internet consumption patterns.

It is understood that NBN Co feeds this data to retail service providers (RSPs) regularly as a kind of prompt for retailers to review the plan users are signed up to and suggest those users upgrade.

It’s not clear how successful the measure is at upselling customers to higher plans, but NBN Co’s submission demonstrates a belief within the company that a significant proportion of its total customer base are stuck on plans that are too small to fulfil their needs.

“As of April 2022, 45 percent of all NBN 25 Mbps services in operation reach their maximum possible utilisation at least twice a month, suggesting that these services are being used at the limit of their bandwidth capacity. This has significantly increased from 33 percent in April 2021.” NBN Co said.

“Across all speed tiers, 29 percent of NBN services in operation achieve their plan’s maximum utilisation threshold at least twice a month.

“This suggests a high level of usage intensity of the NBN network, which is rapidly increasing over time.”

A 25Mbps user would hit “maximum utilisation” if their internet-based activity saw them reach their 25Mbps download speed limit or 5Mbps upload speed limit twice a month, according to NBN Co’s definition.

NBN Co explained the number as follows: “The lower the maximum available bandwidth, the longer applications such as game downloads will take to complete. 

“Even with services operating at their maximum speed, these game downloads can take several hours to half a day to complete. 

“NBN Co believes this is a poor customer experience.”

The low-down

On the flipside, an accompanying submission that NBN Co commissioned from Frontier Economics [pdf] offers some fresh numbers on users that are deemed to be at risk of switching to fixed wireless or mobile, because their data usage is so low.

When NBN Co first filed its special access undertaking variation earlier this year, it offered a supporting submission from Frontier Economics that briefly examined fixed-to-mobile substitutabulity.

NBN Co itself thinks up to half a million of its users could churn to cellular alternatives in the next two years alone.

The newest Frontier Economics report shows there is a much larger at-risk user base that could follow, because their internet consumption levels on the fixed network are so small.

“Many NBN Co users would be characterised as lower use, even if not lower willingness-to-pay,” Frontier states.

“More than 12 percent of 50/20 end-users on NBN Co’s network – in the month sampled – used less than 50GB of data. That is more than 500,000 users. Further, 16 percent or more than 900,000 users used less than 100GB.

“[In addition], 23 percent of users on 25/5 plans use less than 50GB – a further 275,000 users.

“While we would expect that not all of these end-users would be at risk of substitution … it indicates that the potential for substitution is non-trivial.”