NBN is moving to a new discount model for its connectivity virtual circuit (CVC) charge that will provide more price certainty for retail service providers that are selling national broadband network services.
The new model, which comes into effect on June 1, calculates the discount based on individual retailer averages as opposed to an industry average. It automatically reduces the price of CVC as the average amount of CVC per end user increases.
The CVC is a capacity-based pricing scheme based on the shared bandwidth provisioned by ISP customers. ISPs also pay access charges when they sell services over the NBN.
The discount model announced today is next step in the evolution of the ‘dimension-based discount’ pricing, which NBN Co introduced last year on an industry average basis, NBN Co said.
It follows an extensive consultation period with RSPs. Under this pricing scheme, NBN offers a tiered series of increasing discounts based on capacity per end user.
NBN Co’s chief customer officer, John Simon said in a statement: “This change is intended to deliver a number of benefits including greater forward price certainty to retail service providers, allowing them to better manage their cost base and supporting growth in usage on the NBN network.”
Retail ISPs have previously criticised the CVC, saying it would become impossible for retail ISPs and end user broadband customers to afford as broadband usage is anticipated to grow.
Smith said the model will provide further scope for retailers to differentiate their offerings, which in turn, will provide competition and asset consumers in accessing a wider choice of broadband plans.
“Our aim is to achieve better outcomes for end users, RSPs and NBN by providing a more direct link between an individual retailer’s dimensioning and unit price,” he said.
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