NBN Co yields to wholesale pricing criticism, offers rebates

NBN Co yields to wholesale pricing criticism, offers rebates

Even its staunchest critic, Internode managing director, Simon Hackett, is pleased but warns there is more work to be done.

Internode managing director, Simon Hackett.

Internode managing director, Simon Hackett.

NBN Co has heeded criticism from its partners and has offered rebates on wholesale charges on the National Broadband Network (NBN) which could save ISPs up to $3000 per month per point-of-interconnect (PoI) in the short term.

Internode managing director, Simon Hackett, had been the most vocal critic of the NBN’s wholesale pricing model. He had particular concerns over the high price NBN Co would charge for using a connectivity virtual circuit (CVC) at each of the 120 PoIs.

PoIs are where ISPs gain access to the NBN infrastructure. NBN Co had planned for the CVC capacity charge to be $20 per megabit per second (Mbps) per month and $24 for access per customers on a 12Mbps download and 1Mbps upload connection.

A 100Mbps service would be charged at $38 per connection.

According to Hackett, the CVC charges would cripple the ability for smaller ISPs with less than a 250,000 customer base to compete on a national level. He proposed to reduce the cost per Mbps per month to $1 and to bump up the CVC access price instead.

In its recent announcement, NBN Co has not changed the CVC access price but is offering rebates on wholesale charges for the first 150Mbps per month on its CVC. That will last until the NBN passes 30,000 in a connectivity serving area connected to a PoI.

This has the potential to save ISPs $3000 per PoI per month in the initial stages of the NBN’s commercial availability, according to an NBN Co spokesperson.

Each PoI can service between 50,000 to 162,000 premises.

“We have listened to our customers – the service providers – and taken on-board what they have said in order to improve our wholesale service offering and further facilitate their transitions to the NBN,” NBN Co head of product development and sales, Jim Hassell, said in a statement. “It is designed to promote early entry of service providers to any given area by lowering the initial cost of providing services over the NBN.”

NBN is set to be commercially available by October and it is then that ISPs will be charged for using the network.

Even Hackett is happy with the outcome, labelling the rebate as a result of constructive talks between industry and NBN Co.

“This change in the NBN pricing model is important and necessary as a step toward ensuring greater participation in the NBN by ISP, and I welcome it on that basis,” said Simon Hackett in an email to ARN.

But he notes this is not the panacea to NBN's wholesale pricing issues.

“It does, however, only fix half of the problem with bootstrap costs for NBN participation," he said. "The other half is the ACCC's decision to split the network into 121 subnetworks, and I reiterate my call for the ACCC to review that decision and for the Government - who have stated their disagreement with it - to put their action where their words are, and to consider making appropriate legislative change in order to effect the return of the network to the integrated national construct that federal NBN policy originally envisaged and intended.”

iiNet CTO, Greg Bader said changes in the CVC pricing was a good idea and will help ISPs once the NBN is launched.

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Tags nbn coiiNetinternodeNational Broadband Network (NBN)Simon Hackett

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