NBN Co warns of potential network congestion as discounts end

Network operator says congestion may fluctuate as RSPs migrate to new bundled services

NBN Co says it expects congestion levels for National Broadband Network services to fluctuate as retail service providers (RSPs) shift to the wholesaler’s bundled products, which it launched earlier this year, and as a promotional discount scheme winds up.

The company announced in December it planned introduce a range of bundled fixed-line products. The first NBN pricing contracts involved separate payments for access (AVC) and bandwidth (CVC) — essentially an RSP would pay NBN Co a monthly AVC fee for each end user service (based on the wholesale speed tier) and for bandwidth, which is shared between an RSP’s customers.

At the time, more than 80 per cent of end users on the NBN had 25 megabits per second (Mbps) or slower plans. In addition, under-purchasing of CVC was an ongoing issue for the performance encountered by end users. (The introduction of the bundled products followed other NBN Co initiatives to address performance problems, including a CVC discounting scheme.)

NBN Co launched two bundled products: A 50Mbps service that includes 2Mbps of CVC, and a 100Mbps service that includes 2.5Mbps of CVC.

In the transition period following NBN Co’s December 2017 announcement of the new bundled offerings (which became available in May this year), the company offered a discount on its legacy 50Mbps product (cutting it to the price of the 25Mbps tier) as well as a temporary credit offer for acquiring 50 per cent more CVC per user.

The ‘Focus on 50’ discount scheme had the desired effect, with a number of RSPs either ditching or deprioritising sales of the 25Mbps speed tier. As a result the proportion of users on 50Mbps+ speeds has grown significantly. As of August 2018, some 49 per cent of active NBN services had 50Mbps or faster services.

In addition, congestion encountered by end users with fixed line services dropped significantly. As of August this year, average bandwidth congestion across NBN Co’s network was around 1 hour and 1 minute per week per premises. That represents an increase from 28 minutes in July, but down from almost five hours 12 months earlier.

However, Tom Roets, NBN Co’s executive general manager, wholesale products, today warned today that NBN Co expects congestion levels to fluctuate as the Focus on 50 discount ends at the end of this month and as RSPs migrate to the new bundled products.

“To ensure this process runs as smoothly as possible, we have put in place support and resources to help internet providers adjust to the new billing solutions and changes to IT systems. These aren’t things that affect consumers directly, but they need to be carefully managed with the industry to minimise disruption,” the NBN Co executive wrote in a blog entry.

“Our team has built bulk migration tools to help internet providers shift large volumes of customers to the new bundle discounts. A dedicated team will be on standby to provide support should internet providers need it. We will also continue to monitor congestion levels and work with internet providers on how they can help improve the experience for Australians during the busy period (7pm to 11pm).”

NBN Co will still continue to make products based on separate AVC and CVC available to RSPs.

Roets wrote that it “is up to internet providers to pick the most suitable pricing option and provision the amount of bandwidth they deem suitable for their customers”.

NBN Co this week also launched bundled fixed wireless services as well as a new product designed for residential voice-only and basic-broadband users.

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