NBN won't kill 1TB plans: NBN Co

NBN won't kill 1TB plans: NBN Co

Summary: The National Broadband Network (NBN)'s pricing structure will not lead to the demise of terabyte plans, NBN Co has said, because most Australians will stick to smaller plans that will average out the cost of high-use customers for retail service providers (RSPs).

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TOPICS: NBN, Broadband, Telcos
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The National Broadband Network (NBN)'s pricing structure will not lead to the demise of terabyte plans, NBN Co has said, because most Australians will stick to smaller plans that will average out the cost of high-use customers for retail service providers (RSPs).

In the ongoing debate about the NBN pricing structure on broadband enthusiast forum Whirlpool, many had raised concerns about the Connectivity Virtual Circuit (CVC) component of the NBN pricing that charges providers $20 per Mbps used, saying that the high number of users taking advantage of the NBN's high speeds would mean that 1TB plans such as those currently offered by ISPs would be not sustainable in the NBN world. NBN Co spokesperson Scott Rhodie yesterday again defended the company's method of pricing, stating that the network had been developed based on actual usage rather than potential usage.

"While it is true that data volumes used will grow over time, and some end-users will use significantly more data than the average, our network is dimensioned (and priced) to reflect aggregate usage levels. While some users today may well use 1000GB in a month, the relevant factor for any service provider is what the aggregate usage across their entire customer base is."

Rhodie said that the pricing model took into account that data usage would rise over time, but cited Australian Bureau of Statistics (ABS) data that said most fixed-line customers only download 11GB per month, and that many users didn't even use their allocated download limits.

"The key point here is that there is a significant discrepancy between the actual usage and the plans that customers can subscribe to. Research conducted by Market Clarity suggests that Australian internet users only use around 15 per cent of their monthly data allowance," he said. "If consumers did in fact use all their 1000GB per month services today then most service providers would not make a profit on these services."

"The only reason why service providers can offer these high plans is because not all consumers 'use' all their data."

He said that CVC worked on the assumption that RSPs would not be allocating every Mbps of bandwidth to every connection at once, ie, a house with a 12Mbps connection would not always be using all 12Mbps, so this traffic could be managed by the RSP as required.

"We don't envisage that most RSPs will dimension their service on the NBN in that fashion, as it will use additional resources and won't necessarily provide much benefit to their end-users. We assume that they will dimension their CVC based on the aggregate busy hour usage profile of their end-users," he said.

Rhodie again dismissed calls for NBN Co to adopt Internode CEO Simon Hackett's proposed pricing model that would rebalance CVC costs onto the basic wholesale cost (Access Virtual Circuit or AVC), because it didn't take into account the varied bandwidth usage over time.

"While this could be seen as a simple exercise of transferring revenue from the '$Y' basket to our '$X' basket with a small adjustment to our AVC price, this is not the case. Any analysis of what happens at a particular CVC capacity level and its implications for AVC price cannot be consistently extended beyond that specific example," he said. "Simply varying the CVC and AVC charges on one example may come out as net zero, but over time and across other speed tiers the net is far from zero [unless you make the AVC cost prohibitively high for some speed tiers]."

Topics: NBN, Broadband, Telcos

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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23 comments
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  • Anyone see the irony in this article?
    Yes most people wouldn't download 1TB over a month, but the question remains?
    Can the average Joe afford a 1TB plan on the NBN.

    Judging from the early price indicators (Wholesale $20 per MB)...the simple answer is no.

    So in a way, yes the NBN is killing the 1TB plan by limiting access to it.
    cootified
  • I totally agree. Most providers like TPG own their own fibre to the DSLAM and then buy the line off Telstra for $2 a month. They currently don't have backhaul costs of $20 a megabit. So how does this provider continue to offer cheap plans when they now have a significant extra cost.
    michaelsaunders
    • Oh that is interesting, TPG would have laid fibre from each exchange to their data centre. I am trying to understand who would TPG connect to from their data centre to the Internet? any ideas?
      Knowledge Expert
  • And us 1 terabyters pay significantly more for our internet access. I pay over $120 a month to be able to download 1TB, and that also includes uploads. As much as I want the NBN, I'd prefer to stick to copper until FTTH reached a similar point.
    evilsync
  • @evilsync: iiNet provide a 1TB FTTH plan (including uploads) over the NBN for $30 cheaper than your current copper connection (http://www.iinet.net.au/nbn/ - 1TB $99 per month)
    vandermast
    • You forget that CVC is not charged now. NBN provides access for a flat fee at the moment.
      masics
    • Also, Internode has also told people such as yourself to stop using current pricing for NBN as an example, because NBNCo is charging a grand $0 for wholesale, since NBN is still under trial

      Don't believe me, read this
      http://forums.whirlpool.net.au/forum-replies.cfm?t=1675718&p=29#r575

      So do me a favor, stop deliberately spreading lying. You have already said this **** before, and its already been stated its incorrect
      deteego
      • You're partially right in saying that the current NBN pricing isn't going to be identical to final pricing, but you're certainly wrong in saying the NBN in Tassie do not charge RSPs at all.

        They charged RSPs a flat $300 per connection until 30/6/11, which (assuming the customer connected on 1/7/10) comes to $25 per month. This is the equivalent of the NBN AVC/CVC cost for a 12/1 connection downloading ~10GB per month.

        While this is definitely not a TB at 100/40, it's not free either.
        HazTechDad
  • In response to your question about how does TPG connect to the internet. They own the undersea cable going to USA.
    michaelsaunders
  • The thing that NBNCo is forgetting, and that Simon Hackett is pointing out, is that (currently) the contention is low because we are limited by speeds of ADSL2+. The minute you give everyone fiber speeds, contention starts skyrocketting

    On whirlpool Simon already gave an example of this hapenning when we jumped from dialup->ADSL and ADSL->ADSL2
    deteego
  • That's a little ridiculous really. They're saying that pricing will remain the same because usage will remain low, on average, across the use base. Does he not see the flaw in this logic???? Where is the incentive to change from ADSL2+ to NBN? If I'm an average user currently downloading my 11GB per month, why would I switch to a NBN plan that provides the exact same thing for the exact same price?
    m00nh34d
    • I am guessing the speed and reliability of connection would be a good reason?
      Knowledge Expert
    • Telstra will be obligated to disconnect the copper, so you won't have a choice for a fixed connection! You could always go to a congested HSPA+/LTE service!
      ccoughlan
  • My aim is to become an informed citizen on the pros and cons of the NBN and what it can and can't do to meet my particular needs. My concern is with a number of responses I have read on ZdNet re: NBN I find they include a denegration of the views of others including personal attacks, rather than a rational debate that respects the views of others. As a result I am not receiving appropriate information to allow me to undertand how the NBN will or won't meet my needs or the differing needs of my family and friends.
    AB_1000
  • I suggest you visit the NBN Co site, it has much information available. I agree on your points about the personal attacks. It is difficult to resist responding when some people simply jump on you when you try and post something sensible.
    Knowledge Expert
    • NBNCo site may be informative, it however is not impartial for obvious reasons. The whole NBN turned into a religious turfwar when NBN proponents dismiss any form of criticism as FUD instead of actually rationally addressing it
      deteego
  • Umm, it's not as biased as YOU!
    RS-ef540
  • Doubt – let me again remind you, you referred to HC as a goose and dat ego here, referred to me as having Toutrettes… personal attacks don’t go any lower, so please... stop trying to point the finger, because you naysayers are just as guilty as any of us...!

    AB2 – you are not alone. I previously posted my personal thoughts on the NBN here.

    http://www.zdnet.com.au/2-years-on-what-s-wrong-with-the-nbn-339312844.htm

    Towards the bottom of the page the rather large 10 point comment. I hope these help.

    Interestingly the person who asked for such information Fred, didn’t even respond?

    As for personal attacks. Sadly they are part of this process, purely because most here (particularly on the negative NBN team) have their own financial and political agenda’s in opposing the NBN. 'No other reason"...!

    As such when one (such as political party members, Telstra shareholders and those who work for companies who believe the NBN will eat into their profits and therefore their own wallets – at the expense of Australia’s comms and Australians now and future generations) comment … well I believe their disgraceful selfishness needs to be highlighted so that people such as yourself know why these selfish people are commenting so negatively!

    FYI – I have no association what-so-ever with any political party (I'm currently Labor because of the NBN , social policies and a hopeless opposition - however, this could change, particularly with a change of opposition leader). I am not directly or even indirectly involved/employed/have a career in ICT... but "admittedly, I do vehemently believe the NBN is good for us all", even those (and their families) who oppose it!
    RS-ef540
    • RS, thanks. I will still keep checking ZdNet and other sources.
      AB_1000
    • Oh dear RS - you labour in vain.....I bet you are a closet member of the ALP you are just too ashamed to admit it.
      Brianab