NBN Co shows 4.1 percent of free fibre upgraders don't stay on high-tier plans

NBN Co has revealed that 4.1 percent of households that received a free fibre upgrade did not stick out their minimum commitment to a plan of 100Mbps or more.

The figure is contained in a consultation document [pdf] shared with retail service providers (RSPs) on Monday afternoon.

While the figure is within expectations - NBN Co had set an acceptable limit of five percent - the company said the volumes “are statistically significant” and expected to climb as the fibre upgrade program rolls on.

“NBN Co realises the program is in its early phase with technically savvy early adopters likely making up the first cohort of end users,” the company said.

“It is possible that ‘downgrade event’ levels will climb as the program hits mass adoption.”

The net effect of that is a proposed increase in the proportion of premises that get a free fibre upgrade that NBN Co will allow to drop down to a plan below 100Mbps without penalty.

NBN Co had flagged early on in the program that it wanted to dissuade retail customers from signing up to get free fibre but not sticking with a more expensive plan for a set period.

Downgrades could be pursued for reasons such as financial hardship. 

However, fibre could also give some fibre-to-the-node (FTTN) customers a reliable connection to the NBN, and these customers may not have a need for speeds of 100Mbps or above.

NBN Co wound up setting a threshold [pdf] where five percent of free fibre recipients per RSP could drop down to a sub-100Mbps plan without their RSP having to pay.

RSPs technically have to pay $200 for every downgrade over the five percent threshold; on average, no RSP should have breached that mark, but at 4.1 percent, it is close.

The $200 represents an approximate 13 percent clawback of the estimated cost of a new fibre lead-in.

Now, NBN Co is proposing to lift the threshold from five percent to 10 percent for the 12 months to March 2023.

In other words, up to 10 percent of free fibre recipients would be able to drop down to a sub-100Mbps plan inside the first 12 months, before their RSP became financially liable.

The penalty would remain at $200 per premises - "the existing amount that NBN Co can recover from RSPs in this scenario", according to the consultation. The company still has discretion on whether it levies the charge or not.

The change is intended to address concerns raised by the industry about the downgrade limits.

NBN Co said it is also open to threshold changes as the program rolls on.

“NBN Co wishes to discuss what the ‘downgrade event limit’ should be on an ongoing basis,” it said.

“The program has been in-market for over nine months, and as the industry gains more experience of the upgrade processes, NBN Co values your feedback on the optimal limit as the program scales.”

The overbuild of part of the FTTN footprint with a fibre network was dreamed up by the former Coalition government, and is being expanded under Labor.

The change in government has led to fibre being repositioned as the future of the NBN.

Updated 10.58pm: The article originally stated that the downgrade fee is $250 and would move to $200 under this proposal. This was based on erroneous information and has since been corrected.