NBN prices set to drop? They'd better'¦

Alex Zaharov-Reutt
Sunday, 31 July 2011 19:18

Opinion and Analysis

Australia's Federal Communications Minister, Senator Stephen Conroy, says the price of connecting to the NBN will drop lower than what has already been announced. Let's hope our esteemed Minister is right.

With Internode's prices set to AUD $190 per month for anyone actually wanting 100Mbps speeds out of the 100Mbps, with 1TB download limit, and faster NBN to come, it's no surprise to see not only consumers worrying about future pricing, but Australia's Minister for Communications promising cheaper prices are coming.

Of course, Governments normally interfere in markets and through the law of unintended consequences, historically make prices go higher, so it's hardly surprising to see a public scepticism over mere claims by someone who is not actually in the hands-on business of providing services, and crucially, making profits. 

Reported everywhere and even by an enterprising kid called Kidsolo are comments from Sen Contoy, who is quoted saying: 'I see more exciting retail competition and we all know that retail competition will actually lead to lower prices', with Sen Conroy pointing out Exetel's starting $35 per month NBN access price, not that this price will get you that headline 100Mbps speed.

Sen Conroy also stated that: 'These claims people will be paying more in regional areas for the national broadband are just being shown by other retail service providers to be false.'

Unfortunately, Government pronouncements do not guarantee lower prices, so we'll just have to see whether Senator Conroy's predictions come true, or whether they're just wishful thinking.

In the real world, markets determine prices, with input costs going a long way to helping determine a final set of retail prices. 

Given claims by Internode and others that the 100+ points of presence around Australia will see small ISPs having to pay massive amounts of money per month just to be able to offer those services, it's prudent and easy to be sceptical of claims that prices will be affordable.

So'¦ NBN prices had better drop, Senator Conroy, as you've promised, or the legacy you ultimately leave to Australia won't quite be the legacy you presumably intended, as so far, it definitely ain't lookin' good.

Good luck, Sen Conroy. You're gonna need it.