NBN Co needs to double CVC inclusions, say ABB, Optus

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NBN Co needs to double CVC inclusions, say ABB, Optus

Streaming and cloud gaming drive up usage.

Aussie Broadband and Optus say the amount of bandwidth that comes bundled with NBN services needs to double to keep pace with customers’ data usage, and to keep congestion at bay.

In separate submissions to the NBN price review, the two retail service providers (RSPs) suggested traffic growth - particularly for streaming and ‘cloud gaming’ - would force the issue.

Most NBN services are currently sold with a minimum amount of bandwidth (connectivity virtual circuit, or CVC); 2Mbps of CVC with a 50Mbps service, and 2.5Mbps of CVC with a 100Mbps service.

The CVC construct has long been seen as an artificial constraint on NBN performance. 

Before it came bundled with a service, RSPs bought much less of it owing to the cost, which led to widespread congestion issues for users, particularly in the evening peak.

Neither Aussie Broadband nor Optus is particularly enamoured by CVC today, though they recognise it is unlikely to be axed entirely as some RSPs have sought.

One thing that is clear from submissions to the NBN price review is that the CVC that comes bundled with NBN services is already not enough to keep congestion at bay.

That is forcing RSPs to buy more of it (known as “overage”) at a cost of $8 per Mbps per /month.

Aussie Broadband said it was paying “significant overage” in some customer serving areas (CSAs) but had excess CVC bandwidth in others.

It also wound up forking out extra to meet anticipated high-traffic events.

“For high-traffic events like Fortnite updates, if we have prior warning, we pre-provision additional

CVC across the network,” Aussie Broadband said.

“For the last Fortnite update, we pre-provisioned on average an additional 15 percent capacity in CVC.”

The concern for RSPs is that their overage charges will dramatically increase in coming years, particularly if the amount of CVC included with an NBN service doesn’t keep pace with traffic growth and user demand.

Both Optus and Aussie Broadband called for current CVC allocations to be doubled.

Optus did not put a timeframe on this.

“Optus recommends that the current level of CVC included in each broadband bundle be doubled to reflect the future growth of traffic; and to minimise the number of future pricing consultations,” it said in a commentary obtained by iTnews.

“While NBN Co has the option to adopt smaller increases in CVC, the only impact would be to require further changes quicker. 

“We know that whatever increase in included CVC is adopted, it will over time be fully consumed – necessitating further increases. 

“It would be beneficial to industry and consumers to avoid unnecessary and repeated pricing changes.”

Optus also called on NBN Co to reduce or remove overage charges entirely.

“The current rate is far in excess of the incremental costs incurred to provide the additional capacity,” it said.

“Should NBN Co continue with an overage charge, any rate should be reflective of the incremental costs associated with providing the additional shared capacity.”

Aussie Broadband called for a doubling of CVC essentially between now and 2023, producing a forecast based on its own traffic growth projections.

iTnews confirmed with Aussie Broadband that these are the amounts of CVC it believes will be required just to maintain current performance levels of services (for example, 86Mbps typical evening speeds on an NBN100 plan, or 43Mbps typical evening speeds on an NBN50 plan).

If the amount of bundled CVC failed to keep pace with the expected growth trajectory of traffic and usage, it could lead to price rises, performance hits “or both,” the company said.

“We’re seeing more and more streaming, and an increased number of users in households who are streaming different services at any one time,” managing director Phillip Britt told iTnews.  

“We believe cloud gaming (eg Google Stadia) will also impact the need for more CVC.”

Aussie Broadband noted that while CVC inclusions needed to increase, it should not result in price increases.

"The effective price of the bundles would need to stay the same or reduce from the current price levels," it said.

"Reduction of wholesale pricing will need to become a focus for nbn to remain competitive in a 5G world."

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