A new pricing model for NBN services, approved late last year, triggered a significant shift in how TPG Telecom and Optus cater to users subscribed to the popular 50Mbps tier.
Under the previous scheme introduced in 2019, retail service providers (RSPs) could pool all the bandwidth included in users’ plans nationally and redistribute it based on dynamic consumption needs. This meant that unused bandwidth from higher-speed plans could be redirected to offset heavier usage on lower-speed plans.
However, this complex structure led to innovative strategies, particularly at TPG Telecom, as highlighted by iTnews in 2022. TPG Telecom managed around 300,000 customers by switching them between the 50Mbps and 100Mbps tiers based on commercial viability.
With the new pricing model in place, there has been a notable migration of customers from the 100Mbps to the 50Mbps tier. This shift is not due to changes in user preferences but rather reflects adjustments in how services are managed.
According to the ACCC, TPG and Optus saw significant changes in wholesale speed tiers. They purchased around 730,000 more wholesale services at the 50Mbps tier and 780,000 fewer services at the 100Mbps tier. This is likely due to the new pricing structure making the 50Mbps tier more cost-effective for supplying 50Mbps retail services.
Optus and TPG Telecom saw increases of approximately 500,000 and 285,000 customers, respectively, on the 50Mbps tier by the end of last year, with a corresponding decrease in the 100Mbps tier. This suggests a continuation of the price modeling phenomenon observed earlier.
The extent to which Optus utilized this pricing modeling was not clear until the recent release of numbers.
