NBN pushes ahead with price cuts
- 05 April, 2016 05:00
NBN will push ahead with a discounting scheme for one of the major charges it levies on retail service providers (RSPs) that sell services over the National Broadband Network.
NBN late last year carried out an industry consultation on the Connectivity Virtual Circuit (CVC) charge. The CVC is a capacity-based pricing scheme that is based on the shared bandwidth provisioned for an RSP’s customers.
RSPs also pay access charges when they sell services over the NBN.
NBN’s CEO Bill Morrow will today announce in a speech at the CommsDay summit that the company will push ahead with the previously mooted dimension-based discount scheme.
That scheme will offer a discount on the CVC. Instead of a volume-based discount scheme for the CVC, NBN will offer a tiered series of increasing discounts based on capacity per end user.
The more capacity provisioned per end user, the greater the discount. NBN has previously indicated it hopes that this will encourage RSPs to ensure they are provisioning adequate capacity.
The discount scheme will kick in on 1 June.
Initially, the scheme will be based on an industry-wide discount, with NBN intending to examine the potential for an RSP-based discount. NBN has indicated that the decision to initially go with the industry-wide scheme is based on wanting to implement the discounts as quickly as possible.
The initial CVC discount is expected to be in the region of $1.75.
The new model will be in place for two years and then reviewed.
Morrow is expected to tell today’s conference that the average downloads of National Broadband Network end users has increased from around 75GB in February 2015 to 125GB per month — an increase that has presented significant challenges for RSPs.
The new discount model is intended to offer some pricing certainty for RSPs, the CEO is expected to say, with the hope that RSPs look at offering higher volume plans to end users.
NBN has modelled the impact of the discount scheme on its finances. The company hopes that over the long term, the scheme will deliver increased revenue through increased use of the network.