NBN CVC usage climbs as new discounts begin

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NBN CVC usage climbs as new discounts begin

On the move, but by how much?

NBN users may have seen a marginal improvement in the minimum performance of their connections at peak times after ISPs bought more backhaul capacity in the last quarter.

Figures released by the ACCC today showed an “almost 10 percent” increase in the average connectivity virtual circuit (CVC) capacity per user on the NBN, from 1 Mbps to 1.09 Mbps.

“The total amount of CVC capacity acquired by access seekers increased to 2820 Gbps, up 36 percent from the 2149 Gbps last quarter,” the ACCC said in a statement.

However, growth in premises numbers kept a lid on how much of that was seen by the average user.

It is difficult to pinpoint the exact reason for the jump, however it coincides with the first month of a new discount regime that makes CVC cheaper for ISPs that buy more of it.

Previously, discounts were calculated on an industry-wide basis or otherwise had limited impact in encouraging ISPs to buy more CVC capacity.

NBN Co last month blamed a retail price war and subsequent margin squeeze as the reasons behind ISPs not buying enough CVC capacity to raise the minimum performance level of NBN services.

CEO Bill Morrow challenged ISPs to double the minimum amount of bandwidth available to users from an average 1 Mbps to 2 Mbps, which he claimed could be achieved "for around an extra $5 per [user per] month."

However, that would mean having to charge higher retail prices for NBN services, and consumer willingness to stomach higher prices is unclear.

Some ISPs such as Vodafone said it was hard to command a price premium in the market for “quality” NBN services, because the current network construct invariably left consumers disappointed with the speeds they ended up with.

The full impact of the latest CVC discounts won’t be known until the next set of ACCC data is released in three months’ time.

ACCC chairman Rod Sims said he was consulting with industry and NBN Co over the potential for more detailed CVC utilisation data to be made available.

“The ACCC is currently consulting with industry about whether further information relating to the amount of CVC capacity acquired and the utilisation of that capacity by each access seeker group should be reported by NBN Co,” he said.

“The ACCC considers that further information in relation to CVC utilisation rates would assist the ACCC to monitor the development of competition over the NBN and enable it to perform its regulatory functions.”

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