NBN Co to drop CVC price from February

NBN Co has bowed to industry pressure, announcing that it will drop the connectivity virtual circuit charge for retail service providers by 12.5 percent from February 1 next year.

NBN Co will drop its connectivity virtual circuit (CVC) charge for retail service providers of its network from AU$20 per megabit per second (Mbps) to AU$17.50 per 1Mbps, starting from the beginning of February next year.

Australia's National Broadband Network (NBN) builder told its retail service providers (RSPs) in a letter (PDF) published on November 26 that it would drop its CVC recurring charge under the wholesale broadband agreement price list by 12.5 percent, starting from February 1, 2015.

NBN Co first flagged a change in the charge, which reserves bandwidth to a consumer from the point of interconnect (POI), in July. This charge is paid in addition to the access charge for NBN wholesale services levied across all speed tiers.

Major RSPs have previously claimed that the charge would make it difficult to be competitive in the market.

In August 2013, iiNet claimed that it would not be able to offer unlimited broadband plans through its subsidiary Jiva while the CVC charge stood at AU$20 per 1Mbps.

Since 2011, Internode founder and now current NBN Co non-executive director Simon Hackett fought with the company on the issue, stating that the CVC charge, in conjunction with the competition regulator's decision to expand the NBN to 121 POIs, would price many carriers out of the market.

The pricing change announcement follows a consultation period with its customers on the price reduction, settling on its initial proposed 12.5 percent figure.

Just last week, NBN Co released its transitory Corporate Plan 2014-17 , flagging that due to uncertainty surrounding the project, it could not forecast with a "reasonable level of confidence" beyond the next 12 months.

Earlier this month, NBN Co formally ended the plans to roll out fibre to the premises to 93 percent of Australian premises, mandating that fibre to the node should be the default technology choice under the government's so-called multi-technology mix approach to the network's rollout.

However, on November 20, the company's chief operations officer Greg Adcock revealed that NBN Co has yet to gain access to any part of the hybrid fibre-coaxial (HFC) networks that it hopes will make up to 27 percent of its national broadband footprint by 2019, as infrastructure agreements with Telstra and Optus continue.