NBN mulls capacity charge revamp

Along with its quarterly results announcement yesterday, nbnTM has hinted to the industry that its CVC charges could fall again. The connectivity virtual circuit (CVC), currently AU$17.50 per megabit per second, per month, is a large part of the National Broadband Network (NBN) wholesale package that retail service providers ( …

[mathew42]

> The trick, for nbnTM, is to make-over its tariff book without spoiling the average revenue per user (ARPU) growth it needs to one day become profitable.

The ARPU growth is forecast to come mainly from increases in CVC revenue, so any attempt to reduce CVC revenue ahead of the growth curve will cause significant revenue issues. Labor's plan relied on ARPU rising from $32 to $100+ within the next 10 years.

If AVC is increased to cover the gap in revenue, this will make faster speeds less attractive and also make other networks more attractive for light users. Usage based charges make sense as those people who are placing load on the network pay for it. Lowering AVC prices (e.g. abolishing speed tiers) will encourage take-up of the network and also encourage people to download more reducing the per unit price.

> A revised tariff structure would need sign-off by the Australian Competition and Consumer Commission.

Based on the time taken for approval of the original tariff structure that is likely to take two years at least.

[Jasonk]

Lol abolish speed teirs.

Mathew42 the NBN can't abolish speeds teirs now as would you want to pay the same as someone on FTTP getting 100Mbps while you like the 10% On NBN delivering an upto 25Mbps. Would make sense if NBN was rolling out FTTP but they are not.

Even the current model is trying to copy the previous model

http://blog.jxeeno.com/nbn-should-be-doing-more-to-promote-higher-speeds-to-meet-revenue-targets/

[mathew42]

Re: Lol abolish speed teirs.

NBNCo could very easily abolish speed tiers on FTTN by claiming that it was technically too hard to manage the differences in performance. That would simply return us to the ADSL2+ model established by Labor.

I agree that with FTTN now part of the network it would be politically unpalatable to abolish speed tiers on HFC & FTTP. Labor missed the opportunity during their last term in office to abolish speed tiers on the NBN. Currently if Labor attack the Liberals on speed there is a simple response that 80% of customers have selected speeds easily achievable on HFC & FTTN as predicted by Labor's Corporate Plan written while in office.

I disagree that NBNCo should be doing more to promote higher speed tiers to meet revenue targets. The majority of revenue growth for NBNCo will come from customer growth and CVC. Reducing the AVC price will encourage customer growth and also encourage customers to move to faster speeds. Moving to faster speeds will naturally result in customers downloading more (e.g. the QHD stream instead of SD).

[Jasonk]

Re: Lol abolish speed teirs.

What adsl2+ model establish by labor.

Lol FTTN we can give you between 0 to 100Mbps what ever you get you still going to pay the same price. $56B well spent right there lol

Yes that 80% even though the current model the 20% pays more than the 80%.

[mathew42]

Re: Lol abolish speed teirs.

> Yes that 80% even though the current model the 20% pays more than the 80%.

This is only true if you assume that contention ratios are the same for all speed tiers. However if we assume (as Telstra's marketing appears to) that quota is the most important criteria in selecting a plan, then users are willing to sacrifice higher speeds for a larger quota. The impact of this is that the contention ratio for a 12Mbps plan will need to be significantly lower than for a 100Mbps plan. For example a person streaming HD netflix video will consume the same bandwidth on 12Mbps & 100Mbps plans, however the usage ratio will be significantly higher 5:12 versus 5:100.

[Jasonk]

Re: Lol abolish speed teirs.

Yet Telstra is charging the same price for FTTN and FTTP consider Turnbull made the claim his model would be more affordable doesn't look that way

[Paul J Turner]

The only thing that needs to happen

Is that when talking about the bandwidth we pay for, the words "up to" are replaced by law with the words "at least". When the law ensures that we all get what we pay for then Telco's will finally put in place an infrastructure that can actually deliver it.

[Tannin]

Re: The only thing that needs to happen

Spot on Paul. Would you buy a bottle of milk that promised to contain "up to two litres"?

[mathew42]

Re: The only thing that needs to happen

> Is that when talking about the bandwidth we pay for, the words "up to" are replaced by law with the words "at least".

What most people are concerned about is the bandwidth between their computer and the server they are exchanging information with. Often that server is on the other side of the world and the packets traverse networks owned by multiple providers.

> When the law ensures that we all get what we pay for then Telco's will finally put in place an infrastructure that can actually deliver it.

Probably best to start with NBNCo as the standard AVC is sold as peak information rate (PIR) not committed information rate (CIR). For an example of the pricing difference, 25/5Mbps CIR is $27/month. 5/5Mbps PIR is $300/month extra.

If you want CIR, then be prepared to pay significantly more for the privilege.

[Jasonk]

Re: The only thing that needs to happen

Yet in FTTP it guarantees 100Mbps with pir 100Mbps once a day FTTN that same 100Mbps it's guarantee pir is 25Mbps once a day.

[mathew42]

Re: The only thing that needs to happen

> Yet in FTTP it guarantees 100Mbps with pir 100Mbps once a day

Can you find a reference for that? I don't believe there is any such guarantee because your RSP might fail to purchase sufficient CVC for the PoI or network congestion issues on NBN's portion of the network. I agree it is more likely that the connection between the NTU and the GPON will be able to sustain 100Mbps when compared with FTTN, but that doesn't make it a guarantee. CIR is for guaranteed performance and that is significantly more expensive.

[Jasonk]

Re: The only thing that needs to happen

http://www.nbnco.com.au/content/dam/nbnco2/documents/sfaa-wba2-product-catalogue-nebs-product-description_20151102.pdf

[Anonymous Coward]

Re: The only thing that needs to happen

So what happens when the other end of the link is on a 3G connection? I think a minimum bandwidth is a difficult thing to guarantee as it requires the entire connection from end to end to support that minimum bandwidth.

If the person is, say, receiving a file from another user via Skype that's on a slow link, then chances are it could fall well short of the guaranteed minimum speed. So boundaries will need to be placed on such guarantees.

I would suggest that perhaps NBNco or someone independent run a https test download server where you can try retrieving a file and measure its download speed, something akin to speedtest.net. (Hopefully without the Flash requirement though.)

[Myvekk]

Re: The only thing that needs to happen

Stuart, I think you are mistaking actual download speed for connection speed. eg: I am on an exchange with an ADSL2+ connection that can do "Up to 24MBpS".

Due to distance from exchange and quality, (or rather the lack thereof), of the intervening copper, my current connection speed is ~7.2MBpS, but only after I forced my modem to use ADSL protocol for stability. (Interestingly, using G.DMT both my stability AND connection speed increased!)

Download speed, on the gripping hand, varies from the max available due to my connection speed to a few kBpS, depending on source & intermediary relays.

[andro]

> (for example, “10 Mbps of customer package can be served by 2 Mbps of network capacity”) no longer applies when everybody on a DSLAM (or in an NBN service area) is streaming movies at the same time.

No Sh*t! We (the geeks) have been trying to tell you (the current govt) that for years! This kind of usage has been expected by many of us for a long long time now!

[P. Lee]

Re: Netflix costs more to carry

Perhaps a less time-critical more distributed method of movie distribution could be found.

It doesn't have to be piracy. How about a trucrypt partition for caching films? Yes I know it can be defeated, but that happens anyway. I'd be happy to plan a day or so ahead for a discount based on overnight downloads.

[mathew42]

Labor planned for 720% growth in CVC revenue

> No Sh*t! We (the geeks) have been trying to tell you (the current govt) that for years! This kind of usage has been expected by many of us for a long long time now!

No surprises there. In fact the financial modelling in first version of the NBNCo Corporate Plan released by Labor in 2010 relied heavily on increased revenue from CVC to make the numbers to balance. CVC pricing starts at $20Mbps/Month when the average data usage is 30GB/Month and falls to $8Mbps/Month when the average data usage is 540GB/month. Or to express it another way, price falls by 2.5 times, while the average data usage grows by 18 times and growth in revenue from CVC is 720% when accounting for price falls.

What is disheartening is that so few people actually read the NBNCo Corporate Plan and understood what Labor intended. Instead the shiney light of fibre blinded people to reality.

[mathew42]

Incentive for NBNCo to improve the network

Labor created NBNCo as a monopoly with the intention of privatising the network close to the end of the build when the risky parts of the project are complete and profitability of the network reasonably well understood.

The challenge this presents is how do we incentivise NBNCo to continue to maintain the network and improve the performance? If the majority of profits come from usage charges then this provides a clear incentive for NBNCo to maintain a congestion free network and improve speeds so that customers can download more resulting in more revenue. Alternatively if the majority of revenue is serviced from connection fees, then NBNCo has little incentive to maintain a congestion free network because it delivers little additional revenue.

[Faceless Man]

Re: Incentive for NBNCo to improve the network

"Labor created NBNCo as a monopoly with the intention of privatising the network close to the end of the build when the risky parts of the project are complete and profitability of the network reasonably well understood."

This was always my biggest problem with the whole endeavour. They should keep it as government owned infrastructure. Basically a backdoor way of re-nationalising the non-retail bits of Telstra, that should never have been sold off in the first place.