Sluggish top tier uptake throws NBN returns into question

Sluggish top tier uptake throws NBN returns into question

nbn's average revenue per user remains stagnant for another year

Bill Morrow - CEO, nbn

Bill Morrow - CEO, nbn

The company’s performance – along with its ARPU – is also likely to play a role in the terms that can be struck when nbn needs to refinance its $19.5 billion loan facility come June 2021.

It should be noted, however, that while ARPU has remained flat over the past year, it has historically grown over the course of the network’s rollout. Between 2013 and 2014, for example, ARPU rose from around $36.50 to $37 per user per month.

Whether this kind of moderate rise in ARPU will be enough to meet the requirements of nbn’s modelling remains to be seen, with Morrow suggesting on 15 August that the company is heading towards an overarching ARPU of at least $52 by 2020.

“Just on the residential segment we have about $42 per user today, where we want to get to about $50 per user,” Morrow said.

Given that one of the factors likely preventing the ARPU from maintaining an upward trajectory is the continuing uptake of lower speed tier products, the tendency for some NBN retail service providers (RSPs) to keep the amount of bandwidth they have bought up to resell relatively low could be compounding the problem.

To help combat this, nbn applied a new Connectivity Virtual Circuit (CVC) discounting model for retailers, aimed at encouraging RSPs to buy up more bandwidth and, with it, the capacity to sell greater numbers of higher-tier products.

However, demand has largely remained focused on the lower speed tiered offerings, once again casting a shadow over the medium to long-term profitability of the network.

Regardless, the number of premises ready for service on the NBN almost doubled from 2.9 million to 5.7 million during the year, while the number of homes and businesses with an active NBN service more than doubled from 1.1 million to 2.4 million.

With the increase in end users, overall revenue more than doubled from $421 million to $1 billion during the year.

“To almost double the footprint again on the back last year’s efforts is incredible progress and means many more Australians will have access to fast broadband sooner,” Morrow said.

 “Looking ahead, FY2018 is another significant construction year, and arguably the most visible and difficult as we rollout in high-density cities. 

“We are taking our learnings from the first half of the build, and applying them to ensure greater serviceability and efficiencies, particularly as we introduce Fibre-to-the-Curb into the mix,” he said.

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