Weighing up the essentials: the price is right

3-minute read
Research commissioned by nbn reveals the price for internet services is lower than the cost of other household essential services.

Once a ‘nice to have’, these days, internet services are an essential part of our everyday lives.

From supporting us in our work and education, to ‘life admin’ and downtime, access to fast broadband has increasingly become as important to most of us as turning on the tap or switching on a light.

According to new research, Consumer affordability of nbn™ services – conducted by consultancy firm Accenture and commissioned by nbn, the average Australian household spends just 1.1 per cent of weekly income on services delivered over the nbn network – less than that spent on water or electricity.1

Ongoing financial uncertainty and cost of living pressures have put household expenses in the spotlight, as Australians continue to look for ways to manage their budgets and get better value for money.

At the same time, fast, secure and reliable internet has become more important than ever, as it is relied on for work, learning and entertainment. With ongoing lockdowns and the increased time at home, hundreds of thousands of households have upgraded their plans to support increased data demands.

Despite these challenges, new research from Accenture shows that more than 85 per cent of nbn™ customers – across all incomes – say they have found an affordable internet plan.2

Improving affordability

The research found that Australia saw the largest improvement in relative affordability across 13 OECD countries between FY18 and FY20.

From 2017-18 to 2019-20, Australia saw a 0.13 percentage point decrease in broadband prices as a share of income. This was the largest drop seen across all 13 OECD countries in the study.

While the affordability of Australia’s broadband ranks in the top half of 13 OECD countries, data usage has soared – including during the COVID-19 pandemic.

Spending on essentials

According to the research, Australians spend on average more per week on electricity ($25) and water ($21), compared to $16.80 for services over the nbn™ network.1

“With Australians spending more time at home, bills for major household essential services may be at the forefront of personal finances,” says Dr Andrew Charlton, Managing Director within Accenture Australia.

“Our analysis of the people surveyed has found that the current perception of the cost of services over the nbn™ network is predominantly positive, especially with consumers spending more time online than ever before.”

Whilst the report’s key finding is that broadband is largely affordable for most Australians, as part of nbn’s continued commitment to reduce the affordability barriers that still, remain for some, this month, nbn is launching a new wholesale pricing rebate.

dr-andrew-charlton-accenture
Dr Andrew Charlton, Managing Director within Accenture Australia

From 1 September, internet retailers gained access to a new monthly wholesale rebate for eligible unconnected premises in the nbn™ fixed-line and fixed-wireless network footprints that are Ready to Connect, but either never connected or have been inactive for greater than 18 months.

The rebates3 will be paid over 6 or 18 months, depending on how long the relevant premises has been disconnected for. A separate campaign will be run for Sky Muster™ Plus connections.

Jane McNamara, nbn consumer experience expert, says the new pricing rebate initiative is designed to support retailers to market their offers to the unconnected, helping reduce the affordability gap for unconnected households across Australia, to help them benefit from access to high-speed broadband.

“Given the fundamental role of connectivity in all areas of our lives right now, it’s encouraging to know that broadband affordability isn’t a concern for most Australians.

“We are aware though there are still those both on and off our network for whom access or affordability of phone and internet services over the nbn™ network remain a concern, and we’re committed to continuing to work with the industry to address these barriers.”

“We want to ensure unconnected Australians, especially those questioning whether they can afford the benefits of connectivity, are aware of the great deals in the market.”

It is not the first time nbn has supported internet retailers in connecting eligible unconnected households. Launched in August 2020, the “Illuminate” offer4 provided a 50 per cent discount on the wholesale price of most Fixed Line and Fixed Wireless services, for a period of 12 months.

headshot-jane-mcnamara
Jane McNamara, nbn consumer experience expert.

1 Notes from ‘Consumer affordability of nbn™ services’ prepared by Accenture and commissioned by NBN Co, September 2021. The average monthly cost of services over the nbn™ network is $16.8 * 4.34 weeks = $73. Weekly average household income is rounded to nearest $100. Weekly income is post tax and calculated using the five AU income tax bracket rates across the ABS income quintile groups. Only non-bundled fixed line nbn™ plans are used to calculate the average price of plans. SOURCES: ABS Household Financial Resources 2020, CanstarBlue, AEMC Residential Electricity Price Reports December 2020, NBN Co internal data, Accenture Strategy analysis.

2 Notes from ‘Consumer affordability of nbn™ services’ prepared by Accenture and commissioned by NBN Co, September 2021: Consumer sentiment survey of 2,420 respondents in March 2021, Accenture Strategy. Results are based on the survey question ‘How would you rate the following in terms of affordability? nbn, Electricity, Gas, Water’.

3 New wholesale pricing initiative:

a. Under the new wholesale pricing initiative, retailers will be able to access the monthly $15 wholesale rebate two ways:

i. A rebate for six months for each premises that is connected, where the relevant order was placed between 1 September 2021 and 28 February 2023, across most of the wholesale speed tiers, if these premises have been Ready to Connect but either never connected, or inactive, for 18 to 24 months (provided that the retailer has met the applicable baseline number of connections). Retailers opting in later will have shorter campaign periods.

ii. Retailers can also access the rebate from 1 September 2021 for 18 months, if they connect a premises that has been Ready to Connect but either never connected or inactive for more than 24 months, where the relevant order was placed between 1 September 2021 and 28 February 2023 (provided that the retailer has met the applicable baseline number of connections). Retailers opting in later will have shorter campaign periods. To assist retailers to identify unconnected or inactive locations, NBN Co will be releasing a refreshed list of Location Identifiers every month.

b. To help internet retailers support Australian households in regional and remote areas get connected, NBN Co will also be introducing two new satellite incentives to help accelerate connectivity.

i. From 1 September to 30 November 2021, retailers will have access to six months of rebates per eligible service of between $10 and $25 if they upgrade customers from Sky Muster™ to Sky Muster™ Plus, provided that the retailer has met the applicable baseline number of connections.

ii. NBN Co will also be initiating a separate campaign that is currently planned to run from 1 September 2021 to 28 February 2023, where retailers will have access to 12 months of rebates of between $10 and $25 per eligible service, if they reconnect premises to Sky Muster™ Plus which have been inactive for greater than 90 days.

4 Illuminate offer details:

a. In August 2020, NBN Co announced it was broadening its First Timers’ (Illuminate) discount, which offers providers a 50 per cent discount on the effective wholesale charge of most nbn speed tiers for premises that have not connected to the network and have passed their disconnection date by more than six months or have disconnected after having an active service for and have been inactive for more than six months.

b. Under the Illuminate offer, internet providers were given access to a 50 per cent discount on the wholesale price of most fixed line bundles and Fixed Wireless for a period of 12 months. The offer also allowed internet providers to migrate existing Education Assistance customers onto the Illuminate offer for a period of 12 months at the expiry of the COVID Education Assistance package, 15 January 2021.