NBN Co defends its pricing model

NBN Co defends its pricing model

Summary: The National Broadband Network Company (NBN Co)has published an extensive statement explaining its pricing rationale on broadband forum Whirlpool in an apparent attempt to comprehensively respond to continued strident criticism from industry luminaries Simon Hackett and Bevan Slattery about its model.

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TOPICS: NBN, Broadband
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The National Broadband Network Company (NBN Co)has published an extensive statement explaining its pricing rationale on broadband forum Whirlpool in an apparent attempt to comprehensively respond to continued strident criticism from industry luminaries Simon Hackett and Bevan Slattery about its model.

NBN Co had previously published a statement on the matter on Whirlpool last week. However, the post appeared to do more to stimulate debate about its pricing model than quell it, bringing people to post 28 pages worth of comments on the issue.

The debate about NBN Co's pricing model had been kicked off in late March when Internode managing director Simon Hackett described the model as "insane" for small internet service providers (ISPs), warning that none will survive their walk through the "valley of death" transition from the current copper network to the fibre future envisioned by the Federal Government.

In the new post, NBN Co spokesperson Scott Rhodie went into a great deal of detail about the mechanics of the company's pricing model, which includes both a basic per user charge for connecting end-user customers to NBN Co's network — the "Access Virtual Circuit" (AVC) — as well as a charge based on data usage — the "Connectivity Virtual Circuit" (CVC).

Hackett has argued for the balance between the two "$X and $Y" charges to be changed, with the CVC pricing to come down and the AVC pricing to rise.

However, Rhodie argued that NBN Co's model aimed to elicit comparable costs to the current situation so that ISPs could migrate their customers onto the NBN, pointing out that NBN Co also expected the CVC charge to come down in the longer term as customers used more data over the much higher capacity NBN network.

"We've tried to make the balance such that even more end-users will come on and purchase higher speeds than we have predicted, which will then enable us to even further lower the usage (and possibly access) charges," he wrote.

Rhodie also noted that NBN Co's wholesale pricing model was also used in other markets around the world. "The balance may be different, based on their market dynamics, and how usage is charged may differ in some markets ... Australia is at the forefront of how to price superfast wholesale broadband, but it is not alone," he said.

Overall, Rhodie emphasised that NBN Co takes consultation with the telecommunications industry very seriously. "By joining Whirlpool we wanted to open a new avenue for interaction and transparency," he wrote.

"NBN Co has come up with a wholesale pricing construct that we think best meets the objectives set for us by our shareholder, the Commonwealth Government. What has been published is simply what we regard as the most appropriate way to recover the cost of the network in light of these objectives. Other people will no doubt have a different view, but as [Whirlpool user] Myne noted: "Will there be a consensus on every point? Hell no."

Most users have overall welcomed NBN Co's engagement in the forum as a positive sign of the company's willingness to engage; however, Rhodie's post was met with howls of protest from at least one quarter.

"This is disgraceful," wrote Pipe Networks founder and NextDC chief Bevan Slattery on the forum in response to Rhodie's post. Slattery has been a long-time critic of the NBN proposal as a whole, and has joined Hackett in recent weeks in criticising the company's pricing model.

"NBN Co is trying to misrepresent and mislead the public about the true costs to all Australians. The capacity and customers experience this is being built from based upon your own business plan simply is not representative of these examples," Slattery wrote.

"So instead of giving real world examples to the plans that are 1000GB per month, NBN Co decides to not respond for a week and fails to reply to some other real world examples. It retorts with fluff from marketing about $X and $Y. NBN Co doesn't appear to have the courage, conviction nor confidence to give all Australians a view of what the real cost of its vision is."

Topics: NBN, Broadband

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66 comments
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  • Whilst one should heed Simon's comments... imo, it seems obvious that Bevan has been against the NBN from day 1 due to his own business agenda...!
    RS-ef540
    • yeah he's been having a few hissy fits lately
      Hubert Cumberdale
      • And both of you have been in favour of the NBN since day one...
        coolguy4
        • Actually I had been advocating a FTTH network as far back as 1996, I see no reason to even deny this fact since I'm right and it is the anti-NBN zealots who are wrong. Back then people didn't listen to me and now we are paying the price due to the sale of Telstra. Once this NBN is built I can say "I told you so" yet again.
          Hubert Cumberdale
          • wow you obviously are far ahead of the pack. I think ADSL was only available in Australia for the general public in the late 90's, but even before then you were talking about fibre to the home.
            Knowledge Expert
          • yes that is correct and judging from your comments on this site it was also most likely before you even knew what the Internet was. ADSL was and is a stop gap solution.
            Hubert Cumberdale
          • Optical fibre has been around since the 1840's, and used in electronics since the 60's, it's not like Hubert was advocating some new bleeding-edge tech.

            Even I wondered why they invested so heavily in a stop-gap measure like ADSL at the time, especially in a country like Australia where Optical Fibre is perfect due to it's low attenuation compared to copper (giving it _much_ greater range before needing a repeater), so I don't doubt what Hubert says, as he seems to have been around "tech" for a while.
            Tinman_au
  • And you against it...

    I was talking about the article... thanks for your (lack of) input, thereof!
    RS-ef540
  • I think ADSL was introduced in 1996 but released in 1999? But will stand corrected. So...

    But it's good that you (psst tell your mate Visionary too, oh no need, he is you...) that you are finally realising how far advanced the pro-NBNers are compared to you FUDsters...
    RS-ef540
    • Thank you for simply restating and confirming my post regarding the introduction of ADSL into Australia.
      I think both you and "salad fingers" friend are stretching even the credibility of your sycophantic group to have believed that he was advocating a FTTH broadband in 1996.
      Knowledge Expert
      • No problem, I thought since you "finally actually got something right" I'd give credit, as I should.
        RS-ef540
      • You are still not making much sense. I was advocating a FTTH network in 1996. There is nothing unbelievable about it. When and where ADSL was introduced really has got nothing to do with it.
        Hubert Cumberdale
        • yeah great HC, as long as the taxpayer bankrolls the risk you can advocate anything, everyone has these grand visions with other peoples money.

          You should have started up a FTTH company in 1996 HC if you think it was so great, err perhaps not, others can blow money against the wall while you tyre kick at their expense.
          advocate-d95d7
          • Still dont get it do you? Taxpayers pay for roads, consumers pay for cars. Not really a hard concept to grasp but no doubt you'll be here in another few days to spout the same $$$ argument: "boo hoo $43billion, taxpayers etc"
            Hubert Cumberdale
          • The old 'road' crap analogy again, before the NBN FTTH there was and still is BB internet access, after the NBN is built there will still be internet access by others methods.

            Before the NBN was rolled out in the Tasmania pilot areas there was internet, after the NBN was rolled out most residences said no, it doesn't mean they don't have internet access.

            Your 'roads' analogy is so flawed its laughable, it doesn't mean you and others won't keep parroting it again and again again.
            There was one thing about the pro-NBN argument, it's mindless repetition.
            advocate-d95d7
          • Nothing flawed about it at all, you are just incapable of comprehending it as you have proven time and time again. This is no exception "bububu tasmania whaaaaa" As for mindless repetition you can just quote another article on The Australian again if you like.
            Hubert Cumberdale
          • Not that you have explained what was wrong with the CONTENT of that report in the Australian.

            Best let that one go through to the keeper eh HC?
            advocate-d95d7
          • Do you seriously consider The Australian a credible source of information? The content has nothing to do with it, if it was a worthwhile story it would appear on other news sites and then you could link to them but as it stands that has not happened yet.
            Hubert Cumberdale
  • The bigger ISPs (Telstra, Optus etc) who already have their own national fibre back bone networks are in a much stronger financial position with 120 POI's. The cost to those ISP's to provide backhaul is much less that than most smaller ISP.s because they can use existing infrastructure. Why they may even use wireless for backhaul.
    To those who continue to cling to the FTTP being a national broadband network, please be reminded NBN Co are building 120 networks around the country. Those 120 networks are not interconnected for the ISP's. Those 120 networks provide a "last mile" fibre, wireless connection from a premise to the nearest POI.
    Knowledge Expert
  • Putting aside the rather petty name calling which you are so fond to write. Please disprove my comments regarding the NBN Co build?
    Knowledge Expert