Friday, 05 October 2018 10:57

Tassie ISP sees NBN Co move pushing up prices Featured

Tassie ISP sees NBN Co move pushing up prices Pixabay

The NBN Co has issued a blog post warning that congestion on the broadband network may "fluctuate" as it forces providers to choose between the original pricing and the new "bundled" pricing system.

In response, the head of one small ISP has warned that customers will either see a return to the congestion of last year or an increase in their prices they pay for broadband packages.

The blog post appears to be the first salvo in the blame-shifting war of words that is likely to start again between NBN Co and the RSPs.

NBN Co hinted at an increase in congestion by saying, "While there were record low levels of bandwidth congestion experienced on the network earlier this year, we do expect these levels to fluctuate as our promotional discount ends (31 October) and as we help service providers adopt our new wholesale discount bundles."

Damian Ivereigh, the chief executive of Launtel, a small ISP in Launceston, said what was clear to him from the blog post was that the NBN would separate into two: "The more expensive, higher-speed and lower-congestion bundled offerings and the cheaper, low-speed and more congested non-bundled offerings."

He said the NBN Co's bundled product, offered from December 2017 onwards, forced providers to buy a certain amount of CVC along with the AVC they were buying. This meant a better experience for customers as the speeds were better.

Prior to that, providers could buy AVC and then decide on how much CVC they bought; this decided the extent of congestion on their plans but was cheaper for them.

Ivereigh described the NBN Co's post as "self-serving".

"The smaller carriers will have to pick one or the other. Ourselves (Launtel) and Aussie Broadband are going the bundled route," he said.

"The large carriers may have the scale to run both (a different CVC for each at each POI). This is going to create a lot of confusion in the market unless the ACCC forces carriers to publish the amount of CVC they are buying per customer (their 'CVC dimension' in NBN speak). The bundles come included with either 2Mb for the 50/20 or 2.5Mb for the 100/40 and above."

A graph provided by the NBN Co in its blog post gives the impression that ISPs will be given a significant discount when they buy bundles.

But Ivereigh dismissed this. "This discount is very small when compared against the standard prices just before Focus on 50 and there is no discount versus the prices charged during Focus on 50," he said.

He provided a table (below) giving the prices before the NBN Co's Focus on 50 campaign to try and get customers to subscribe to higher-speed plans, and during that campaign.

Speed and CVC Pre Focus on 50 Focus on 50 Bundle
12/1 with 2Mb $24 + 2 * 10.25 = $44.50 $24 + 2 * 8.30 = $40.60 $45
25/5 with 2Mb $27 + 2 * 10.25 = $47.50 $27 + 2 * 8.30 = $43.60 $45
50/20 with 2Mb $34 + 2 * 10.25 = $54.50 $27 + 2 * 8.30 = $43.60 $45
100/40 with 2.5Mb $38 + 2.5 * 9.00 = $60.50 $38 + 2.5 * 7.50 = $56.75 $65

It clearly showed that the only plans which gave the provider some margin was for the packages which offered 50Mbps/20Mbps.

Ivereigh said it was thus inevitable that providers would start raising their prices soon, if they had not done so already.

As iTWire has reported one small provider, MyRepublic, raised its prices some time ago and is advising users who reach the end of what it calls the "promotional period" that they would have to pay more. In the case of the 100/40Mbps plans, for example, the price differential is about $15, going from $69.95 to $84.99.

Ivereigh has also warned that smaller RSPs may be pushed out of business after October once the bundles sold by NBN Co more or less become the single way that RSPs buy bandwidth from the company.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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