How Telstra and Optus are making their NBN plans cheaper
The big telcos are passing on discounts, but beware of contract traps.
Last month, NBN Co announced major changes to its pricing model to try and encourage consumers to sign up for faster plans. In very simple terms, it introduced a discount which meant that telcos paid exactly the same for 50/20 plans as they did for 25/5 plans. In turn, that should mean telcos would make their existing 50/20 plans cheaper, and potentially drop their 25/5 option altogether. (You can check out my original detailed analysis for more information.)
That process of plan changes has been happening, but slowly. We saw that TPG quickly announced new pricing and effectively killed off new 25/5 signups, but there was a conspicuous silence from Telstra and Optus. Collectively, those three brands account for the vast majority of NBN customers, so it's those price changes that will potentially make the biggest difference.
This week we've finally seen both Telstra and Optus tweak their NBN offerings to reflect the new pricing. The changes (first reported by itnews) show that predicting how telcos will respond to a price cut isn't easy.
Optus is offering a new version of its Made for Entertainment bundle. That's usually priced at $95 a month if you want 50/20 speed and unlimited downloads, but the telco is discounting it to $80 a month for the first six months a customer is on board. That lines up very neatly with when NBN Co is expected to introduce a brand new range of plan options with guaranteed throughput. However, since it's a 24-month contract, anyone who signs up will be stuck with the existing deal for another two years, and won't be able to take advantage of those newer offers.
Telstra's approach is slightly different. It is now offering 50/20 as the slowest available speed on the majority of its 24-month contract plans (any plan at $80 a month or more). Month-to-month customers can still sign up for the 25/5 speed (or 12/1 if they really don't want any improvement). Telstra's deal appears to run for the entire 24-month period, so you won't experience any price shocks until the contract ends, but you also won't be able to easily switch.
Both Telstra and Optus ended up having to offer refunds to customers for not being able to deliver promised speeds on the NBN last year, so it's not surprising that it's taken a little while for them to come up with new offers. That said, I'd be cautious about signing up with either right now since you'll be locked in for a long time. With new lower-congestion plans due, freedom of choice is going to be important.
If you're already on the NBN, it's always worth comparing all the available plans. But if you're due to get NBN within the next six months (you can use our tracker to check), I'd be inclined to wait until the full range of new plans emerges in the middle of the year.
Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.