NBN blinked when big Australian telcos had their CVC pants down: Aussie Broadband

NBN was the first to blink after Australia's retailers would not purchase enough CVC capacity, bringing down its wholesale pricing as a result, Aussie Broadband's MD has told ZDNet.
Written by Corinne Reichert, Contributor

The National Broadband Network (NBN) amended its wholesale pricing after a game of chicken with retail service providers over connectivity virtual circuit (CVC) capacity, Aussie Broadband co-founder and MD Phillip Britt has told ZDNet.

Speaking with ZDNet in an interview this week, Britt said the Australian Competition and Consumer Commission (ACCC)'s NBN speed-monitoring reports -- in conjunction with NBN's Focus on 50 wholesale pricing discount and the mandate that RSPs advertise typical evening speeds -- is "really what cleaned up the big boys behaving badly".

"Ultimately, they weren't provisioning enough CVC; they basically were going to get caught with their pants down," Britt told ZDNet.

"NBN needed to fix the customer experience. NBN ultimately blinked first, rather than the providers provisioning more bandwidth.

"It eroded our competitive advantage overnight, because we were provisioning enough bandwidth, and suddenly everyone was on this level playing field from a bandwidth perspective ... we've still come out on top [of the ACCC report], but the whole congestion thing was a massive selling point for us, and customers were churning to us in droves because of that. The churn in market these days is not as strong, I think because of that."

While the end of NBN's Focus on 50 pricing discount had forced Aussie Broadband to shelve its lower-end plans, Britt said he believes the 50/20Mbps product is now priced "about right".

However, he said he would like to see 100/40Mbps pricing come down by about AU$10 to see more customers jump to the higher speed tier and fix NBN's ARPU problem.

Beating the big four retail service providers in the second speed-monitoring report was a "nice surprise", he added, and the company is hopeful that it can back up this result in the upcoming ACCC report -- due in the next two to three weeks -- but its network is "continuing to keep us challenged".

"It's all sort of based on a philosophy of making sure that no point of interconnect is ever in a case of being oversubscribed," he said, explaining how Aussie Broadband scored so highly on the ACCC's report.

"We've got two mechanisms for the way we do that: By staff that directly monitor each POI every single day, multiple times a day; and then we've got some automation scripts that actually do the monitoring as well, so if it's within certain tolerances then the scripts will just make the decision and we'll go ahead and provision more bandwidth and manage the network, do all that automatically.

"If it's not within the tolerance that we're setting, then it goes up to humans to make the decision of 'yes we're going to put some more bandwidth there'."

Aussie Broadband is also planning to invest AU$4 million to upgrade its network and capacity as it adds between 5,000 and 7,000 new customers per month, after the current network was built for around 130,000 subscribers. With Aussie Broadband predicting that it will reach around 180,000 customers by June 2019, it wants to provide capacity for up to 500,000.

The company hasn't made a final decision on its vendor yet for the upgrade, though Britt said it would likely be the telco's existing primary tech vendor Cisco.

"We're also starting to look at buying international capacity and managing our own bandwidth into Australia," he added.

"There's quite a lot of new cable system providers entering the market now, so we're starting to look at that."

Aussie Broadband is looking at utilising the Hawaiki subsea cable system, Britt said, although the company is also looking to subsea cables landing in Perth.

Aussie Broadband is currently sitting at around 82,000 NBN connections, Britt said, 12,000 of which are fixed-wireless and 46,000 on fibre to the node (FttN). While it is pushing to exceed 100,000, he said this is becoming harder due to NBN's rollout delays, including across the hybrid fibre-coaxial (HFC) re-release and the fibre-to-the-curb (FttC) deployment.

Britt also sees Aussie Broadband growing to more than 200 employees by June next year, as it has a policy of one support staff member per 5,000 customers.

Speaking on Aussie Broadband's recent outage, Britt revealed that it was the result of a betting agency customer being targeted during the AFL grand final weekend. The company is therefore "a bit concerned" about the upcoming Melbourne Cup next week.

"We have a customer that's a betting agency, and we believe that we were targeted to target them," the MD explained.

"And so what happened was there was a lot of voice requests hitting our firewall, and we probably didn't have enough capacity in that firewall infrastructure, and we were fairly open about that. Basically, that triggered this cascading failure from there, we lost authentication out to our equipment, so about half the customers couldn't authenticate anymore.

"Part of what we've done to fix that is all the authentication mechanisms now have a separate direct pathway to each of the POIs and the aggregation points that we use, so that if that firewall infrastructure gets hit again ... we might lose access to some of our internal services. We're still working that through, getting those changes made."

Speaking on NBN's fixed-wireless congestion, which saw Aussie Broadband last year argue that the rollout be paused, Britt said NBN is now doing what it needs to fix this -- including by adding more cells, increasing backhaul, switching from microwave to fibre backhaul, and utilising its spectrum holdings.

"They've got an awful lot in the works at the moment, and I think we'll see that really start to come to fruition over the next couple of months," he said.

"I think they're on track now to deliver the changes that need to be delivered, the problem is I want it now, I don't want to have to wait six months for it, I want it now and I just have to accept the fact that these things take time.

"I think they will get there, but the issue is going to become -- they're still only building to have a 6-meg floor, and I disagree with the 6-meg floor ... I think the design spec needs to be higher, but to get it higher is going to need more and more cash put in, or change the build in some areas to fibre to the curb."

Aussie Broadband is continuing to stick to its policy of not putting more customers on congested fixed-wireless cells; however, Britt said the problem is having this knowledge ahead of time.

"The main thing we've been sort of arguing for is to know -- and NBN says we can't give you an exact certainty that that's where the customers going to land ... but if the probability is like 85 percent that they're going to land on a congested tower, then tell us that," he said.

"But we've got our own internal data on where our existing customers are who have trouble, and we sort of cross-reference that and use that as a mechanism for warning people."

Britt added that NBN is being "a lot more open and transparent" now, with new CEO Stephen Rue engaging in talks with RSPs right off the bat and being very receptive to suggestions on how to improve customer experience.

Related Coverage

Editorial standards