NBN to change CVC discount model to benefit individual providers connecting more broadband customers

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NBN to change CVC discount model to benefit individual providers connecting more broadband customers

The NBN will make changes to its network that it expects will drive down prices for ISPs who connect more customers.

The changes entail a shift to a new discount model for the NBN’s Connectivity Virtual Circuit charge, which will affect the cost for internet providers to hook-up areas that then allow customers within that area to gain NBN access.

While current pricing sees CVC discounted when average usership across the whole industry increases, the new model, coming into effect mid-2017, calculates the discount based on individual retailer averages.

An individual CVC’s monthly cost will be reduced based on how many end users are on that particular bandwidth pipe.

John SImon, NBN chief customer officer said the change granted multiple outcomes.

“This change is intended to deliver a number of benefits, including greater forward price certainty to retail service providers (RSPs), allowing them to better manage their cost base, and supporting growth in usage on the NBN network,” he said.

“It will also provide further scope for retailers to differentiate their offerings, which in turn will promote competition and assist consumers in accessing a wider choice of broadband plans."

The new model follows the June 2016 introduction of the NBN’s “dimension-based pricing mechanism”, following consultation with ISPs.

Our aim is to achieve better outcomes for end users, RSPs and NBN by providing a more direct link between an individual retailer’s dimensioning and unit price,” Simon said.

“We have worked closely with industry in order to make sure we are delivering a range of competitive broadband services for all Australians. Today’s announcement is another step in helping us create value and competition in the market.

“We will continue to review our pricing structure to ensure it supports uptake and usage of the NBN network.”

The new model, which comes into effect on 1 June, applies the discount on a monthly basis as covers all NBN technologies except satellite.

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