NBN Co doles out data discounts

The company rolling out the NBN is hoping telcos will warm to its latest wholesale pricing structure.

02/07/2019. Panelist Stephen Rue NBN Co CEO speaking at The Australian's Competitive Advantage Forum.Jane Dempster/The Australian.

NBN Co is trimming its wholesale prices and giving retail telcos more data capacity, in a bid to quell industry discontent over high charges imposed by the company rolling out the National Broadband Network.

The new measures announced by NBN Co on Tuesday should keep a lid on retail prices paid by consumers for NBN services, for the time being, and also see homes receive a more reliable service.

Aussie Broadband boss Phil Britt said the new structure is good news for consumers.

“NBN’s focus is now moving to encourage customers to move onto 100 megabits per second (Mbps) download speeds, as a result, we will probably see prices drop for this speed tier in coming months.”

Meanwhile, Optus said the additional data capacity will help it deliver better services to customers. However, the telco’s head of regulatory affairs, Andrew Sheridan, said further cuts will be required to “maintain service performance and meet customer expectations.”

Under the new structure, the cost of the 25 Mbps plan is being cut from $45 to $37. Meanwhile, the connectivity virtual circuit (CVC) inclusion on the 50Mbps bundle is being bumped up from 2Mbps per customer to 2.25Mbps per customers from May 2020, with wholesale charge unchanged at $45.

CVC is the price telcos pay to move data from the NBN to their networks. It remains the most controversial aspect of the NBN Co’s pricing structure, with telcos labelling it an artificial tax on bandwidth.

NBN Co has categorically ruled out scrapping the charge and instead opted to dole out more capacity to the telcos to help them meet the demands of consumers.

While the higher data inclusions have been welcomed by the industry, Telstra has criticised NBN Co’s reliance on discounts.

“NBN Co needs to move away from temporary discounts and offers to lowering actual price,” a Telstra spokesman said.

“While some of the changes are positive, the overall suite of proposals adds additional complexity and potential confusion for customers.”

Meanwhile, Vodafone Hutchison Australia’s head of fixed broadband, Matthew Lobb, warned that the CVC issue still needs to be addressed.

“By persisting with the CVC cost element, NBN Co has kicked a problem down the road,” he said.

As flagged in September NBN Co has also introduced three new wholesale high-speed tiers and associated bundle discounts, which will be available from May 2020.

The new high-speed offers include, a new 100Mbps download and 20 Mbps upload bundle, which Telstra had agitated against, as well as a 250/25 and a 1000/50 bundle.

Apart from the higher CVC inclusions, NBN Co is also changing the rules that govern the reallocation of unused data capacity, a move that NBN Co’s chief customer officer for residential services, Brad Whitcomb, said will help telcos manage their capacity better.

“This will deliver efficient use of CVC…the complexity of managing 121 POI can be inefficient and cost telcos some money, from May next year they will be able to pool all of the capacity.”

NBN Co is also addressing the problem recently raised by the Australian Competition and Consumer Commission (ACCC) where consumers can never make full use of their plan speed even outside busy hours.

The technical issue, present across all NBN technologies, is caused because a small amount of bandwidth is needed to transport the data across the network and make sure that it reaches the right IP address.

Mr Whitcomb said on Tuesday that NBN Co will now overprovision capacity to telcos to cover the gap.

“By overprovisioning the consumer will now get the speed they have signed up for, we think it’s good value for consumers.”