NBN Co has moved to accelerate the uptake of the National Broadband Network (NBN) by offering a rebate on the wholesale charge on its Connectivity Virtual Circuit (CVC).
The rebate will apply for the first 150 Megabits per second (Mbps) per month for the first 30,000 premises in a connectivity serving area, which are connected to each of the 121 points of interconnect (PoI), each of which service between 50,000 and 162,000 premises.
Retail service providers (RSP) will still pay the same access charges, which start at $24 per month for a wholesale broadband service for speeds of 12/1Mbps. However the CVC — the size of the “pipe” needed to meet the aggregate data usage of consumers — will be rebated.
NBN Co head of product development and sales, Jim Hassell, said the move was to encourage competition and followed talks “with Internode and a whole bunch of RSPs” around rethinking the CVC charges for both the long and short term.
“This move is aimed at lowering the barriers to entry for RSPs and we expect it to promote retail competition and service innovation, leading to flow on benefits for consumers,” Hassell said.
“The rebate will give service providers a lower-cost opportunity to enter a geographic area and build their customer base in the early days.
“It is designed to promote the early entry of service providers to any given area by lowering the initial cost of providing services over the NBN.”
According to Hassell, a small number of customers would prove too expensive for an RSP and would result in them “wearing” the cost or overcharging for the service.
“It was designed to give the smaller [RSPs] a chance to get in there and build up their footprint without getting clobbered with an overhead in the early days, they can go and build it up, get that footprint in and then know when the charging will set in without having to make a big upfront investment.”
Commenting on the transitional CVC pricing, Internode managing director, Simon Hackett, said it was a positive outcome from interaction between NBN Co and industry around the NBN Co access pricing model.
“Our shared interest is in seeing engagement with NBN Co from as many RSPs as possible, to ensure the maximum competitive benefit from the network to consumers around Australia,” Hackett said in a statement.
“This change encourages participation from RSPs by making it viable to offer sustainable services at appropriate performance levels until the addressable market in each service area is large enough for fully self-supporting service delivery.”
Hassell noted there had been a lag between issues raised by smaller RSPs and the changes that have been made, as the company must consider whether RSPs were trying to gain an advantage over others or whether the issue was genuine across the board and warranted changes.
“One of the cost challenges in migrating to the NBN is utilisation efficiencies during the rollout phase of the network. The transitional CVC pricing is a good idea and will help retail service providers in the period between launch and the time it takes to reach scale in the network," iinet chief technology officer, Greg Bader, said in a statement.
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