[LINK] NBN pricing may dull broadband benefits: economist

[Gordon Keith]

On Sat, 9 Mar 2013 09:42:28 PM Paul Brooks wrote:
> He is correct - it doesn't actually cost NBN Co any more, primarily because
> NBN Co only goes as far as the POI. It costs the backhaul provider more,
> but that is outside the NBN Co bit. However, it does set up a scale of
> increasing price for increasing functionality, which sets up a yield curve
> that can be optimised . If they charged a single price, it would be higher
> than the current lowest-tier price, which would cause price-sensitive
> customers to not purchase.  A sliding scale allows them to collect the
> maximum number of customers, each for as much as they are comfortable to
> bear.

But should the sliding scale be on speed or data?

I'm on the cheapest NBN plan, 1Mb/sec 30 GB / month (it's 12 Mb/sec download, 
but I'm firmly of the opinion that broadband speeds should be quoted as the 
slowest rather than fastest speed) because 30 GB / month is adequate for my 
current needs. So long as it is faster than dial up I'm not too fussed about 
speed.

For users at the lower end I suspect the price sensitivity is on quota not 
speed. You could have all the advantages of price discrimination without 
losing then potential benefits of future high speed applications (which will 
increase customer demand for quota) by having all plans at full speed but have 
the price scale with quota.

My $0.02
Gordon