Paying $30 for the NBN? Don't expect super speeds

If you are only paying $30 a month for the NBN, don't expect a super fast experience, especially at peak hours, when you are most likely to actually want to use the internet.

Instead, customers paying only $30 per month are part of the "land grab" among telcos trying to get as many customers as possible out of the scrum as millions of Australians transfer from a Telstra-owned phone network onto NBN Co's infrastructure, according to NBN Co's chief executive Bill Morrow.

"You should expect a 12 megabit per second [Mbps] top line speed, and the actual speed at busy hour will depend and vary by retailer but I would not expect that speed to remain at 12 Mbps if you are paying $29," Mr Morrow told Fairfax Media.

He recently told a parliamentary joint committee the slower 12 Mbps product "was never designed for broadband" and its widespread use may be why so many people complain about their experience on the NBN.

"It was designed for a voice-based product in case somebody in a home says: 'I don't want to surf the internet over that network; I'll use my mobile device or nothing. I just want a phone service.' The 12-meg product was created for that. Now it's suddenly being used because it is cheaper than a 25 product," he told the committee on August 1.

NBN Co reported its full year results on Tuesday. Its total revenue was $1 billion, exceeding its target of $900 million and a doubling of last year's $421 million. Average revenue per user remains static at $43 per month.

About 30 per cent of fixed line users are on the slowest speed tier (12 Mbps), while 53 per cent are on 25 Mbps, a slight increase from last year, and 17 per cent are paying for 50 or 100 Mbps.

In regional areas the proportion of customers buying faster speeds is higher, with just 16 per cent of fixed wireless customers on 12 Mbps (the remainder are on 25 Mbps or 50 Mbps). However, in these areas copper phone lines remain intact, so users are selecting NBN services specifically for internet.

Meanwhile, NBN Co is about to have its most expensive year ever with a predicted $10 billion loss as roll out costs reach a peak along with disconnection payments to Telstra and Optus, according to the 2017 corporate plan.

"I think you are going to find that the volume of spend is going to be one of our highest next year...the reality is that when you see the build start to taper off that is going to have a dramatic decrease in the amount of capex," Mr Morrow said.

Revenue is forecast to double to $1.9 billion in 2017-18, but operating costs alone will reach $2.3 billion while capital expenditure remains up around $6 billion, up from $5.8 billion last financial year.

Disconnection costs - a fee NBN Co pays to Telstra or Optus whenever a premise is transferred to NBN Co's infrastructure - will reach $2.8 billion this year and peak at $3.1 billion in 2018-19. The majority of this money goes to Telstra.

Construction and disconnection costs will start to decrease from mid 2019, with NBN Co expecting to be cash-flow positive by 2021.

Chief financial officer Stephen Rue said $27.5 billion in equity funding from the government will last until September this year, after which NBN Co will start using a $20 billion loan from the government that it has to repay at a commercial rate.

At the end of the financial year NBN Co had 2.4 million active users, up from 1 million in June 2016. It expects to pass 6 million premises "within weeks".

Mr Morrow said NBN was the "fastest deployment ever seen around the world" with an unprecedented rate of growth.

NBN Co also produced a slide comparing the top five brands by end user experience with each brand. The average score was 6.1, a generally positive experience, and the five brands vary between 5.9 and 7 points.

However, NBN Co refuses to name the brands, instead leaving Australians in the dark about which companies provide the best experience.

"We don't want to be in the business of naming and shaming and recommending who you should go to for your retailer," Mr Morrow said.

"That is not our role. These are our customers...It is not good business practice to be out naming and shaming our customers. That isn't going to help investors get the return that they need."

The competition watchdog is currently setting up a broadband monitoring program that will publish the actual speeds experienced by consumers on the NBN with each telco.

Meanwhile the Australian Communications and Media Authority has been asked to investigate increasing complaints from consumers about their NBN experiences.

Smartphone
Tablet - Narrow
Tablet - Wide
Desktop