Optus urges reform of broadband over NBN Co bandwidth charges

Optus has renewed a push to change the way NBN Co charges retail internet service providers for bandwidth.

Optus chief executive Kelly Bayer Rosmarin. Picture: Britta Campion

Optus has renewed a push to change the way NBN Co charges retail internet service providers for bandwidth, telling the competition regulator that the social and economic benefits gained from the network are at risk.

In a submission to the Australian Competition & Consumer Commission’s inquiry on NBN access pricing, Australia’s second-largest telecommunications company said the ACCC needed to support a change to the NBN’s CVC pricing system.

“The importance of efficient and competitive wholesale broadband pricing has not been higher as the economic and social impacts of the COVID-19 pandemic hit home for Australian consumers,” the submission said.

“More than ever, Australians are relying on affordable broadband services to stay connected to friends and family, and where possible, to continue working and learning from home.”

The CVC system involves a retail internet provider buying bandwidth from the NBN for a fixed fee and then reselling the internet to its customers at a flat monthly rate.

Companies like Optus say the pricing structure causes network slowdowns at peak usage hours as the number of people using the network begins to exceed the available bandwidth.

Companies like Optus say NBN Co’s pricing structure causes network slowdowns at peak usage hours.

As network usage increased when people began to work from home earlier this year, the NBN provided additional CVC free of charge to prevent network throttling.

Optus says this is proof the current model is not fit for purpose.

Optus chief executive Kelly Bayer Rosmarin told The Australian last month the large spikes in data usage through the COVID-19 crisis had demonstrated the “mismatch” in the NBN pricing system, and the current CVC pricing system should be modified so that high bandwidth users pay extra at peak times.

Optus vice-president regulatory and public affairs Andrew Sheridan said it would be possible to pursue such a policy without affecting the NBN’s return on invested capital.

“COVID-19 has brought the problem into stark reality as increases in demand mandated the suspension of the CVC construct as social obligations trumped commercial considerations,” he said.

“Let’s remove the CVC and collapse wholesale prices into a monthly access fee that varies by speed.

“To meet its ROIC NBN can either adjust its wholesale prices over time, with these costs being passed to end users with greater transparency, or they can innovate and develop new value-added services, as other businesses do.”

To date the ACCC has committed only to regulating the prices of lower-speed NBN options — to ensure individuals without a need for high-speed internet transitioning from ADSL don’t pay more — but Optus says this is no longer relevant to most consumers.

Mr Sheridan also said the government should look at refining the universal service obligation. “The regulatory framework that governs the NBN is currently half-baked and serves no one well.”