NBN Co makes it official - backhaul charges will fall

NBN Co has followed through on its promise to cut the price of its services with a 12.5 per cent snip off the price of its connectivity virtual circuit (CVC) as of 1 February 2015. Currently $20 per Mbps per month, the CVC will fall to $17.50 per Mbps per month under the new agreement, published in template form by the network …

[mathew42]

Cheaper CVC = Higher AVC = Slower Speeds

First, I want to make a few points:

1. The costs of NBNCo are fixed and do not rise substantially with more customers because the bulk of the cost is is building the network.

2. NBNCo has two sources of revenue: AVC (connection charges) and CVC (data or usage charges)

3. NBNCo revenue target is costs + 7% (return on investment, ROI)

This means that if you reduce the cost of CVC this means that AVC will need to rise. There is little room to increase the price of the popular base plan (12/1Mbps) because of competition with mobile phone operators. Therefore it is the higher speed plans which will need to increase in price to cover this decision. The increase in the more expensive faster plans will make them less attractive.

Less people connecting at faster speeds will justify the Liberal government's position that most people are not prepared to pay for fast Internet (>100Mbps). Less people connecting at faster speeds will also mean less people downloading data because they have to wait for data.

[anonymousI]

Re: Cheaper CVC = Higher AVC = Slower Speeds

mathew, you sound a bit desperate and uninformed here, as you do on some Australian blogs.

For example, you have chosen to completely ignore two key items:

The last cost of rolling out the network (before the govt canned it) was less than early figures; and

The takeup of higher level plans was substantially higher than budgeted.

These differences support the lower CVC charges. These are a clear benefit for endusers, despite the impression you have sought to create to the contrary.

[mathew42]

Re: Cheaper CVC = Higher AVC = Slower Speeds

> The takeup of higher level plans was substantially higher than budgeted.

But the percentage of 12Mbps remained unchanged, exposing the digital divide that AVC pricing creates.

> These differences support the lower CVC charges. These are a clear benefit for endusers, despite the impression you have sought to create to the contrary.

There is a clear benefit in low CVC charges for that category of end users who want unlimited data plans with speeds of 100Mbps or less. Dropping AVC charges would encourage take up and people on faster speeds tend to download more meaning that usage goes up resulting in CVC prices dropping.

Finally, it should be clear to all that it is the data transiting the network which puts load on the system and is therefore what charging should be based on.

[DownUndaRob]

No 'National' in NBN

This is the costs incurred when creating 121 REGIONAL Broadband Networks instead of the original 7 that were planned...