Aussie Broadband calls for return of the NBN bandwidth bonus

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Aussie Broadband calls for return of the NBN bandwidth bonus

Until a permanent restructure of price construct is made.

Aussie Broadband has asked NBN Co to resurrect the bandwidth bonus scheme that ran through much of 2020, shielding retail internet providers from excess charges as demand for broadband grew.

Managing director Phillip Britt suggested the connectivity virtual circuit (CVC) bonus could act as an interim step while a more permanent solution to CVC provisioning - and to the CVC construct itself - is found.

CVC is a variable cost component of NBN Co’s pricing that is charged in addition to a fixed cost component. 

During Covid, NBN Co provided up to 40 percent extra CVC on what a retail service provider (RSP) purchased in February 2020 at no extra charge.

NBN Co started to unwind that in December last year, and has since reinstated full excess charges.

The reinstatement of CVC charges comes against a backdrop of widespread industry pressure for the CVC construct to be axed entirely, and for NBN wholesale prices to switch to a single flat-rate charge.

A price review by NBN Co offered to contemplate this sometime after FY23, but in the interim asks RSPs to effectively pay more for services, via a fixed cost component increase, more excess CVC charges, or both.

Retailers such as TPG Telecom, Vocus and Optus criticised the proposals yesterday, and Aussie Broadband added its voice. 

NBN Co’s proposals “were not even remotely close to what the company is looking for,” Britt said.

Britt said that post-pandemic traffic over Aussie Broadband’s network is much higher than the industry average, likely a by-product of the number of high-tier users that the company has.

“Pre-Covid, the industry saw an increase in average broadband usage by 16 percent year-on-year,” Britt said.

“During 2020, this growth had accelerated to an average of 27 percent. 

“What we’re seeing here at Aussie Broadband is actually 35 percent above industry usage, and as a result, this is putting even more pressure on our margins.”

To immediately ease the margin pressure, Britt has asked NBN Co to “reinstate a Covid-19 style rebate to give RSPs the certainty and confidence to continue to facilitate growth in the market and promote high speed services to the benefit of all.”

iTnews confirmed the intent is for a similar scheme to the up to 40 percent bandwidth boost to be enacted.

“The telco industry has effectively come off 12 months of not having to worry about CVC, other than network traffic during Covid,” Britt said. 

“The NBN proved during the pandemic that it completely supported the needs of both the industry and consumers, and we’re looking for this support to continue. 

“We believe this is in the interest of all Australians.”

In the mid-to-longer term, Britt is asking for the same price construct changes that he unsuccessfully sought during NBN Co’s last pricing review in 2019.

First, he has asked NBN Co to substantially increase the amount of CVC that comes bundled with high-tier services of 100Mbps and up.

“The company believes they should include an allocation of 10Mbps of CVC per ... high-speed bundle (100/20Mbps and up),” Britt said.

The long-term request remains to scrap CVC entirely and move to a single flat-fee charging model.

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