Home Telecoms & NBN ACCC optimistic for consumers as CVC acquisition rises

ACCC optimistic for consumers as CVC acquisition rises

Telstra continues to dominate the market for services on the NBN, well ahead of all other telcos, with just under half of the services nationally. The good news is that there has been a significant increase in CVC acquisition across the industry by retailers.

The latest report by the competition regulator, the Australian Competition and Consumer Commission, reveals a significant increase in Connectivity Virtual Circuit acquisition – the fee paid by the telcos to get more bandwidth on the NBN.

According to the ACCC, it expects consumers will have faster broadband speeds and hopefully less congestion during peak evening periods due to the increase in CVC acquired.

The ACCC report shows that CVC acquired by retail service providers increased from 1.11 megabits per second to 1.53 Mbps per user since the September 2017 quarter, an increase of 38%.

In December, NBN Co made retailers a temporary credit offer for acquiring 50% more CVC per user, and it also made Access Virtual Circuit at 50 Mbps available for the price of the 25Mbps.

“We are pleased to see such a large jump in the CVC acquired by retailers from NBN Co this quarter,” ACCC chairman Rod Sims said.

“NBN Co’s response to retailers’ concerns about CVC pricing seems to have had an impact on the amount of CVC being acquired which we believe will benefit consumers through better quality broadband.

“We hope NBN Co and retailers can continue to work together to ensure the level of CVC needed for a good customer experience is maintained.”

This latest National Broadband Network Wholesale Market Indicators Report from the ACCC shows that Telstra now accounts for 49.3% of all wholesale services supplied over the NBN.

It also reveals that Telstra’s 55% market share in regional areas compares to times before the NBN rollout when Telstra often had a share of well over 60% – and its current 43% market share in metropolitan regions is similar to its traditional metropolitan market share.

The ACCC says that by the end of 2017, five access seekers were connected to all 121 points of interconnection, and other smaller players have also continued to increase their access in the last quarter.

“We're pleased to note a fifth broadband provider is now connected to all 121 points of interconnect, with other smaller providers well on their way. This is great news for competition and, for Australian broadband customers, it means greater choice in which provider to connect with,” Sims said.

The ACCC report shows that the number of services connected to the NBN rose from just over three million to nearly 3.5 million in the December quarter, an increase of 14%.

Key points from the ACCC’s December report:

  • NBN Co was supplying a total of 3,467,306 wholesale broadband access services (up from 3,038,483 services in the September quarter).
  • Demand for network capacity continues to increase with NBN Co contracted to supply a total of 5385 gigabits per second of CVC capacity (up from 3452 in the September quarter).
  • The amount of CVC acquired per user increased to 1.52 Mbps (up from 1.11 Mbps in the September quarter).
  • There are 27 access seeker groups directly connected to NBN Co’s network. Of these, five (Telstra, Optus, TPG Group, Vocus and Aussie Broadband) are connected at all 121 POIs.
  • The most popular speed tier remains 25Mbps, accounting for 54.3% of services.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).