NBN says no, actually, Australian internet prices are not too high
NBN Co has hit out at telcos and consumer groups that claim internet prices are too high, commissioning and publishing research that suggests Australia is actually one of the most affordable markets for broadband in the world.
The research — commissioned late last year and undertaken by AlphaBeta — aims to undermine Telstra’s frequent calls for NBN Co to lower its wholesale prices, placing Australia seventh out of 22 countries in terms of “broadband affordability”, behind Germany, France, the UK, Japan, Russia and South Korea, but ahead of many others including the US, Italy, Poland and Spain.
A key consideration not taken into account by other calculations, according to AlphaBeta, is the relative wealth of Australia as a country. Rather than directly comparing the price of broadband between countries, the research derives an “affordability” figure by expressing broadband cost as a percentage of each country’s average income.
When putting together a median price for broadband plans in each country (the plan prices were adjusted to neutralise the value of things like included pay TV access), and converting that median straight into US dollars, the researchers found Australia placed all the way down at number 19.
However, when the broadband cost was expressed as a share of the country’s income, Australia jumped to the number seven spot, leapfrogging the likes of India, China and Indonesia where internet is cheaper but people are also paid less.
NBN Co’s research indicates that the median broadband plan in Australia costs 1.4 per cent of Australian income per capita, compared to, for example, Canada where it costs 2 per cent. Of course, given the discrepancy between the highest earning Australians and the lowest, low income families might still find the price of broadband too high.
Last month NBN Co chief executive Stephen Rue defended the wholesale prices it charges internet providers and talked up his relationships with retailers amid heavy criticism from Telstra.
Earlier this year the Australian Communications Consumer Action Network (ACCAN) called for a $20 per month concession for low income families to help them afford internet access. ACCAN said at the time it estimated the average Australian household spent 3.5 per cent of its disposable income on communications, but that households in the lower 10 per cent of income spent around 10 per cent of their disposable income.
Broadband plans in Australia start from as low as around $20 per month, but these are typically slow ADSL plans with tight data caps (which would have been included in AlphaBeta’s research); unsuitable for families and with the potential to cause extra fees. The cheapest plans with unlimited data and at least a 20Mbps connection are in the $50–$60 range.
Still, the NBN’s research claims that the cost of broadband internet across the board is affordable compared to most other countries, breaking out the data into low, medium, high and very high speeds and showing that Australia ranks in at eighth or ninth in each.
In fact the report contains Australian Bureau of Statistics data showing that the cost of telecommunications generally has fallen 6 per cent since 1990, while the cost of electricity has risen 224 per cent and health services 134 per cent.
The ABS calculates these prices on a per unit basis, so the fall in telecommunications prices is likely due to the huge increase in competition and great advances in technology over the past 30 years, including the home and mobile broadband markets that barely existed in the ’90s compared to electricity and health.
But AlphaBeta suggests that the NBN rollout has had a direct impact on the fall in costs as well, pointing to a 22 per cent drop in telecommunications prices since 2013. The researcher suggests that as the rollout has hit more areas consumers have had access to greater capacity internet plans, but also lower cost internet plans, forcing the per unit price as measured by the ABS to fall.
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