NBN eyes new discount scheme for RSPs in early 2017

NBN forecasts CVC price drop to $10

NBN CEO Bill Morrow expects that “if all goes well” NBN will implement a previously mooted discount system based on how much capacity per customer an individual retail service provider (RSP) provisions.

In April the company announced it would move ahead with industry-wide dimension-based discounting. The discount applies to the Connectivity Virtual Circuit (CVC) charge, which is a capacity-based (per megabit per second) charge levied on RSPs offering services over the National Broadband Network.

When the company announced it would trial dimension-based discounting, it said that it would look to potentially shift towards a model involving individual discounts for RSPs based on capacity per user.

In addition to CVC, RSPs pay an access-based per user fee (AVC). The CVC has been a source of controversy, with NBN blaming some end user performance issues on under provisioning by RSPs, and critics of the charge arguing that in the long run it will impact telco margins significantly and potentially boost the cost of broadband for end users.

“Our CVC pricing has come down more than 20 per cent over the past 20 months from $20 in February of 2015 to $15.75 now,” Morrow told a Senate Estimates hearing yesterday evening.

“Part of this reduction comes with an industry-average volume-based discount model and we are now consulting on a discount model that moves this to an RSP-average, allowing retailers to further differentiate their product offering and pass along lower price as end users demand more data.”

Morrow said he expected a further drop in CVC pricing, with NBN forecasting the CVC pricing approaching $10.

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