NBN Co changes hated CVC rules

NBN Co has responded to the review of wholesale pricing urged by retail service providers (RSPs) by significantly changing pricing.

The network builder-and-operator has made two main changes.

One is to allow national pooling of connectivity virtual circuit (CVC) charges, the mechanism NBN Co uses to charge for bandwidth consumed by RSPs. Today, RSPs can pool CVC capacity in areas associated with one of NBN Co’s 121 Points of Interconnection (POIs).

Now the company has decided to allow national pooling of CVC capacity.

The change will be welcomed by RSPs because they may have few customers served to one POI but many at another. Sharing CVC capacity across Australia will mean they don’t need to buy more CVC at busy POIs and can instead “smear” capacity around the NBN. The result should be lower costs.

NBN Co has also confirmed it will adopt “over-dimensioning” for most fixed-line broadband products from “mid-2020”.

This change will take into account the fact that network protocols generate traffic that has nothing to do with the data users send or receive over a network. As reported by CRN sibling publication iTnews last month, the Australian Competition and Consumer Commission (ACCC) and Telstra have advocated for over-dimensioning so that users could see the peak speeds marketed to them reflected in speed test results.

 “Where possible, NBN Co will provision this allowance into its wholesale speed tiers to accommodate protocol overhead, which includes the code used to ensure the correct delivery of data packets that otherwise impact a customer’s broadband speed,” NBN Co said in a statement issued today.

Another result of the review is the introduction of two new high-speed wholesale bundles, namely:

• A 100/20 bundle discount starting with 3.75Mbps of included CVC capacity at an effective charge of $58 per month, or $7 less than the current 100/40 bundle discount and with more CVC.
• A 250/25 bundle discount starting with 4.75Mbps of included data capacity at an effective charge of $68 per month. CVC capacity inclusion of this plan will increase to 5.25Mbps in May 2021. The new 250/25 bundle discount is $32 less, or 32 per cent cheaper, than the current 250/100 bundle discount.
• An up to 1000/50 bundle discount starting with 5.75Mbps of included data capacity at an effective charge of $80 per month.

The 100/20 plan won’t come into force until May 2020, so NBN Co will offer an interim plan it will market as a “Hot 100” offer, but based on the current 100/40 discount bundle and offered at the same prices as the future 100/20 plan.