NBN chief admits to image problem, will review pricing

NBN chief admits to image problem, will review pricing
NBN chief admits to image problem, will review pricing

The National Broadband Network is reviewing the pricing for Australia's $50 billion broadband network to address growing complaints by customers about internet speeds and quality.

The chief executive of NBN, Bill Morrow, said the company is facing an image problem. Telcos have complained that it was the NBN's pricing mode that was driving up their prices, while at the same time around 15 per cent of users were facing problems.

Morrow said he was reviewing the pricing model that could include measures to give disgruntled customers a better idea about the quality of the service they were paying for. 

He said a "land grab" by retail service providers chasing market share was misleading customers about the speeds they were paying for, The Australian Financial Review reported.

"We have to take it seriously, it is causing reputational damage and it does need to get fixed and we are committed to working with the industry to get it fixed," said Morrow.

A review of the pricing model could include introducing "minimum assurance" standards for certain products, such as media streaming, to ensure customers were receiving a certain level of service. He said NBN was looking at a restructuring of the pricing mechanism.

"I am sympathetic with the many smaller retailers, in particular, who say I am stuck in this price war and I can't step up and raise my price to the end users.

"So, we are thinking can we restructure the CVC (Connectivity Virtual Circuit charge) and the AVC (monthly access charge) to have a minimum assurance of a certain quality of product ... do we introduce a media streaming product?"

NBN Co is in initial talks with broadband providers.

The CVC charge is the price NBN charges service providers for the bandwidth they want for their customers. The NBN lowered its its CVC charge to $15.25 per megabit per second from $20 per megabit per second in December last year. Under a new pricing model announced earlier this year, they will be able to get discounts based on how much CVC they purchase per end-user. 

Morrow said most NBN problems were around two issues: slower-than-expected internet speeds reported by some customers and technical issues in connecting premises. About 15 per cent of NBN customers have complained about their connections.

Just a few days back, NBN Co’s chief network deployment officer Kathrine Dyer said no premises will be left unconnected by the time the rollout is completed in 2020.

Nearly 200,000 premises faced lengthy delays connecting to the network despite the fact that the NBN has been rolled out in their neighbourhoods.

Morrow said the number of complaints was rising as new network connections accelerated, but the overall percentage had fallen. It is activating about 40,000 to 50,000 new customers a week, which will increase even more as the project is targeted to be complete in 2020.

The NBN has been swamped with complaints from customers about speeds that they say are lower than what they used to get on ADSL. 

When asked if the NBN had an image problem, he said: "I do [agree]….it is partly our fault. It is partly taken out of context because 85 per cent [of customers] are fine with this. It is the 15 per cent that is a large number because of the volumes we are dealing with. It is not just a lightly dissatisfied but a seriously dissatisfied service."

Australian Competition and Consumer Commission chairman Rod Sims said last week Telstra, Optus, TPG and Vocus could face legal action if they were found to have misled consumers about their NBN speeds.

"Most of the marketing attention is on price, not what kind of speed you are going to get," Morrow said, adding that 75 per cent of customers did not know what speed they were on.

"There is a land grab phenomena where retailers are chasing market share and classically during a land grab phase you get more discussion on price and less discussion about quality."

He said NBN was working on installation problems, particularly issues around an existing provider cutting off a customers' service before they were connected to the NBN. 

Nbn Broadband


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