NBN CVC... deal or no deal?

Alex Zaharov-Reutt
Wednesday, 10 August 2011 11:41

IT Policy - Government Tech Policy

Internode's Simon Hackett still stays CVC prices are too high and must come down because the cost overheads are too high.

Australian NBN Co, the company behind the construction of Australia's National Broadband Network has been forced to come to the Connectivity Virtual Circuit (CVC) pricing table.

At first, CVC pricing that enabled ISPs to offer user accounts across all 121 points of interconnect (POIs) could see costs of hundreds of thousands of dollars per month just to be able to offer service, let alone have any actual paying customers as yet.

This meant that all but the biggest ISPs were effectively cash crunched out of the competition, and rightly annoyed all manner of people including Internode chief Simon Hackett.

After all, what's the point of Australia's great broadband equaliser if it's not also equalising the ability of entrepreneurial Australians to sell access to the service?

While the NBN Co has seen some small rays of light in ensuring that ISPs now need to have 30,000 premises connected to each of the 121

ISPs won't have to pay the CVC charges on the first 150Mbps per month served through the CVC connection until there are 30,000 premises passed in an area connected to one of its planned 121 POIs, but then they'll have to start paying after that!

That's not much of a deal. ISPs are still up for big money, damaging the very competition that's supposed to make the NBN truly affordable and truly revolutionary.

Simon Hackett is quoted by Delimiter saying in an email that 'What [the NBN CVC deal] does do is to eliminate an otherwise punitive set of access cost overheads that would otherwise be present from 'time zero' onward until the network is at a commercial scale (30,000 addressable customer premises per service area.

'Those punitive access overheads were not accommodated in the pricing we've already announced. In other words, we had determined that announced pricing on the basis that this rebate or an equivalent was in the pipeline already.'

Mr Hackett also stated that without the CVC deal that prices would "ultimately have been driven higher".

Thus the NBN has a lot more work to do to convince all of Australia's ISPs - and frankly all Australians - that it really is getting on top of the pricing issue so that Australians can be assured that truly affordable NBN pricing is delivering by a thriving and competitive market - rather than ever more expensive NBN prices that merely replace the 'tyranny of distance' with the 'tyranny of unaffordability'.