Home Telecoms & NBN Telcos can make NBN speed problem disappear, insists Tasmanian ISP

Telcos can make NBN speed problem disappear, insists Tasmanian ISP

Telcos can make NBN speed problem disappear, insists Tasmanian ISP Featured

The head of a Tasmanian retail service provider has taken issue with statements made by Robin Eckermann, an adjunct professor at Canberra University, about CVC pricing and its impact on prices for NBN packages.

Damien Ivereigh, the chief executive of Launtel, was quoted in The Australian earlier this month, saying that the speed woes experienced by NBN users could be eradicated if telcos paid an additional $9.75 per month for each connection.

He also said that NBN connections were slow simply because telcos were fighting a price war and refusing to buy adequate bandwidth.

Prof Eckermann had contested this, telling iTWire that based on CVC pricing at $15.25 per month, an additional $6.25 per customer would mean about 400kbps additional CVC capacity per user while $9.75 translated to about 640kbps additional capacity.

Ivereigh said today that he found it surprising that Eckermann was not across the the relatively new NBN Co CVC discount model.

"They (NBN Co) are now offering deep discounts (greater than 50%) to those carriers that are willing to buy more CVC. In order to keep the playing field level between the small and larger players, they are providing the discount based on the average amount of CVC purchased per client," he told iTWire. 

"To calculate it, just total up the amount of CVC purchased across all the POIs and then divide it by the total number of services. NBN Co calls this the 'CVC Dimension'. For most carriers this number comes in at less than 1000kb (1Mb). To get the maximum discount, the carrier would need to raise this to 3100kb."

He said assuming a carrier was dimensioning just less than 1000kb (CVC allocation per client), then they would be paying at a rate of $15 per 1000kb, which worked out to $15.00 per client. 

"If they were to raise this to 3000kb, they would be paying just $8.25 per 1000kb, so $24.75 per client - an increase of just $9.75. So to increase the amount of CVC by three times would cost just $9.75 per month to the carrier."

Ivereigh said Prof Eckermann was wrong in his original assumption of the pricing of CVC being $15.25 per month.  

Prof Eckermann had also said: "It's difficult to see this doing a lot towards addressing the deficit users regularly see when comparing actual speeds with the nominal speeds they are paying for (12/25/50/100 Mbps etc download speeds) during busy times. The problem is a multi-Mbps problem, not a multi-kbps problem!"

Ivereigh said he was "frankly astounded" by this statement. 

"Prof Eckermann clearly does not understand how networks work, which for someone of his background, I am amazed about," he said. "The CVC Dimension is about how much shared bandwidth is available to all the clients. As a number it is not equivalent to the peak speed (which unfortunately is what plans are sold on), but it is a good measure of the quality of the network (i.e. how well the network will perform during peak periods). 

"For the non-technical (person), it may as well be a star rating. To use an analogy, the water network will fail if everyone turns on all their taps at once. However, in practice this does not happen and it would be ludicrous to design a water pipe network to handle this. 

"So as with water networks, the RSPs should size their network (and their CVC purchase) on an average peak load with some headroom for some unexpected peaks. Indeed, if I were the ACCC, I would be forcing companies to publish their CVC Dimension (they can read it off their monthly NBN bill)."

In the same article, iTWire had quoted Mark Gregory, RMIT network engineering assistant professor, and Rod Tucker,  Laureate Emeritus Professor at the University of Melbourne and a member of Labor's Expert Panel that advised on the NBN, as well. Ivereigh said he had no substantial disagreement with the points they had made about other issues around the NBN.

"However at this point I don't think it is that relevant," he added. "When a patient presents to hospital complaining of chest pains, the staff deal with a possible heart attack, they don't start talking about the diabetes that got the patient to that point or whether they should quit smoking."

Ivereigh also took issue about the frequent contrasting of the broadband rollout in New Zealand with that in Australia. 

"I agree that the CVC model leaves a lot to be desired, with New Zealand being the oft quoted counter example. However, it is important to point out that Chorus (the New Zealand equivalent of NBN Co) was handed almost $10 billion to do the fibre rollout," he said.

"Not a loan, just an on-budget expense which all New Zealand taxpayers will pay for. NBN Co was set up during the 2007/2008 global financial crisis and it was decided to keep it off budget and make it a government-owned business, which means it has to pay interest on government loans. 

"The net result is that in New Zealand taxpayers are subsidising the Internet. I am not saying either way is better, just pointing out that this is a conversation that needs to be had."

He said Prof Tucker had pointed out that there were other bandwidth constraints, such as the cost of bandwidth between Tasmania and the mainland.

"As a Tasmanian ISP, I am well aware of this. However, this is no longer the issue it used to be and right now the CVC pricing is a much bigger constraint, which has been improved dramatically by the CVC Discount model," he added.


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