NBN has said it will push ahead with a new scheme that aims to combat under-provisioning of capacity by retail service providers and deliver price certainty for RSPs that sell National Broadband Network Services.
The new scheme will see individual RSPs potentially receive a greater discount on one of the key fees they are charged by NBN, depending on how much capacity per end user they provision on the National Broadband Network.
NBN on 1 June last year introduced a ‘Dimension-Based Discount’ (DBD) scheme for RSPs for its Connectivity Virtual Circuit (CVC) charge. CVC is levied on RSPs in addition to a per-end-user access charge (AVC). It is a monthly charge sold in 100 megabits per second blocks.
The charge is extremely unpopular among telcos.
The discount scheme introduced last year was based on industry-wide CVC commissioned per end user — the more capacity per end user, the greater the discount.
After the initial DBD scheme was introduced, CVC pricing dropped from $17.50 to $15.75. In December, CVC dropped to $15.25.
NBN’s CEO Bill Morrow has previously said that the company forecasts CVC pricing will approach $10 over time.
NBN announced this morning that from 1 June, a CVC discount will be calculated on a per-RSP basis. The discount will not apply to NBN’s satellite service.
The company has previously indicated it would look at shifting to a per-RSP discount. As before, the discount is based on capacity commissioned per user — which NBN says will offer RSPs an opportunity to differentiate their offerings. Because it's not a volume-based discount, larger RSPs won't benefit unduly, the company says.
“This change is intended to deliver a number of benefits, including greater forward price certainty to retail service providers (RSPs), allowing them to better manage their cost base, and supporting growth in usage on the NBN network,” NBN chief customer officer John Simon said in a statement.
“It will also provide further scope for retailers to differentiate their offerings, which in turn will promote competition and assist consumers in accessing a wider choice of broadband plans.”
Industry has been broadly supportive of the approach, NBN said.
NBN won’t reveal full details of the new discount structure. NBN has “worked to refine” the original discount scheme’s tiers “in order to line up with the work we’ve done with the industry on usage”, executive general manager of pricing, Sarah Palmer, told a briefing this morning.
“There’s slightly deeper discounts and there’s more of them,” Palmer said, with CVC potentially cut to $8 for an RSP.
The original scheme topped out at 1500+ kbps per end user (for an effective CVC price of $11.50)
Under-provisioning of CVC by RSPs has previously been blamed for poor end user performance on the National Broadband Network.
Simon said that NBN would continue to review its pricing structure.