Australia's top NBN RSPs say lockdowns expose them to excess bandwidth charges again

Australia’s five biggest internet providers are lobbying NBN Co and the federal government to waive excess bandwidth charges they say are being incurred while parts of Australia re-enter lockdown.

The providers - understood to be Aussie Broadband, TPG Telecom, Telstra, Optus and Vocus - escalated their request to Communications Minister Paul Fletcher after being rebuffed by NBN Co.

The existence of a letter sent by the retail service providers, which collectively account for over 96 percent of all NBN fixed-line users, was first reported by CommsDay.

The letter text, which was also sighted by iTnews, called on the government to reintroduce a connectivity virtual circuit (CVC) bonus scheme that ran for much of last year.

In general, as an RSP’s customer base uses more internet, the RSP may need to buy more CVC bandwidth to meet demand and maintain performance levels, particularly during peak periods of demand.

The 2020 uplift offered RSPs up to 40 percent extra CVC capacity above February 2020 levels at no extra cost.

RSPs now want to see the bandwidth bonus scheme reinstated, arguing that lockdowns have caused traffic volumes to rise substantially, leaving the retailers open to excess CVC charges.

“The reintroduction of lockdowns across Victoria and NSW has resulted in a material increase in peak NBN usage,” the letter text seen by iTnews states.

“Industry peak traffic has grown as a result of the current lockdowns in a similar way to the previous lockdown, which NBN Co estimated at around 35 percent, so to support the surge of lockdown usage and to avoid congestion, we’re required to purchase additional CVC overage.”

The RSPs estimate that NBN Co is pocketing a “windfall … estimated to be in the tens of millions of dollars” a month, courtesy of excess charges for bandwidth.

NBN Co refutes that assertion, and argues instead that traffic levels have not grown at similar rates as they did during the first lockdowns in 2020.

“We have generally seen the largest increase in data demand during the first week of any lockdown, with data demand then stabilising and reducing as restrictions ease,” an NBN Co spokesperson said.

“Following the introduction of lockdowns in both NSW and Victoria, national data demand across the NBN peaked at 20.39 Tbps on the evening of Saturday 17 July, an increase of approximately eight percent week on week.

"During the last seven days, daily and evening data demand has subsided from the peak of last weekend.

“We are closely monitoring this dynamic situation, and considering our options on how we can work with retail service providers to ensure all Australians are well supported during this time.”

NBN retailers, in turn, say in the letter that it is “not clear” how they and NBN Co have such different pictures of network usage and traffic growth as a result of the latest set of lockdowns.

The fresh argument over CVC comes at a time when industry is heavily lobbying for the CVC construct to be axed entirely, and for a simpler pricing structure for NBN services overall.

Through that process, the industry is also seeking some form of interim measures around pricing to be put in place, until permanent changes can be drawn up and ratified by regulators.