NBN Co to slash wholesale prices, CVC is here to stay

NBN Co has bowed to pressure from retail service providers (RSPs) by slashing prices on its wholesale bundles and proposing three new high-speed tiers.

The discounts, detailed in a new Pricing Consultation Paper (pdf) released today, followed 12 weeks of consultation with more than 50 RSPs and industry groups. The changes are still subject to industry consultation, though CRN can’t imagine many RSPs will be upset with cheaper wholesale prices!

NBN Co doesn’t intend to scrap the much maligned CVC (connectivity virtual circuit) charges for offloading traffic from the NBN to the RSP’s network. Instead, NBN Co plans on increasing capacity across most of its bundles with no additional charge, and will increase it again in 2020 and 2021.

The three new high-speed wholesale bundles NBN Co plans to introduce comprise:

• 100/20 bundle at $58 per month, $7 cheaper than the existing 100/40 bundle, starting with 3.75Mbps capacity and increasing to 4Mbps by May 2021. These services would be considered for all fixed line services over FTTB, FTTC and FTTN services.
• 250/25 at $68 per month, compared with the $100 cost for the current 250/100 bundle. It starts with 4.75Mbps of capacity and will increase to 5Mbps in May 2021.
• 1000/50 speeds for $80 per month, or $100 less than the current 1000/400 bundle. It would include 5.75Mbps of capacity, increasing to 6Mbps in 2021.

Both the 250/25 and 1000/50 bundles are under consideration for FTTP and HFC connections.

NBN Co chief customer officer residential Brad Whitcomb said: “One of the most important benefits for all customers is that our proposed high-speed wholesale bundle discounts with more generous CVC inclusions will enable RSPs to continue to apply unused CVC as a pool of capacity that can be shared across all bundled discount services within the same Connectivity Serving Area (CSA), helping to manage CVC costs and improve CVC capacity for other customers in that area.

NBN Co is also proposing discounts to its cheapest plans.

Wholesale charges for the 25/5 bundle would be reduced from $45 to $37 by November 2019, and capacity would be lowered from 2Mbps currently to 1.25Mbps, though NBN Co would take it back up to 1.5Mbps in May 2021.

There’s no proposed discount for the 50/20 tier though, NBN Co’s most popular with 65 percent of customers. Instead, NBN Co proposes adding extra CVC inclusions to the bundle, rising from 2Mbps to 2.25 Mbps in May 2021 and 2.5Mbps in May 2021.

Even the entry level 12/1Mbps bundle, which starts at $22.50, would be discounted. Instead of charging another $22.50 customers that exceed their average monthly peak usage, customers would only be charged an additional $5.70, plus an additional $8/Mbps CVC charge to accommodate higher data users. The charge would be lowered to $4.90 in May 2020 and $4.10 in October 2020.

“In feedback received during the first round of consultation, respondents and industry bodies highlighted that the 12/1 wholesale speed tier is an important tool for maintaining a clear migration path from legacy ADSL to NBN services,” said Whitcomb.

“Specifically, a number of respondents stated that a discount to the entry level wholesale bundle would help them to maintain an affordable retail broadband plan in market with uncapped data inclusions.

“The changes to the Entry Level Bundle discount will help provide greater choices to RSPs to support more cost-conscious customers and supports one of NBN's priorities, which is to ensure we continue to have strong take-up."

NBN Co also pledged to lay out a rolling two-year roadmap of future pricing with incremental capacity increases. “This roadmap is an important step in showing service providers that we are listening and taking decisive action to provide greater certainty to the industry,” said Whitcomb.