Chicken & Egg Problem
> But it [NBNCo] doesn't feel that FTTP is the way to meet that future demand. Indeed it doesn't believe there's a time at which gigabit-per-second home services will be necessary, but does believe that once such demands emerge they can be served with heirs to G.fast over copper.
Labor had two choices when establishing NBNCo:
- Expensive connection charges (AVC) for speed tiers and cheap data (CVC)
- Cheap connection charges (AVC) and expensive data (CVC)
Instead they chose the middle ground of speed tiers (AVC) and close to expensive data (CVC).
Labor predicted the result of this decision would be 50% connecting at 12Mbps on fibre. Currently 33% are connected at 12Mbps and 46% at 25Mbps. The 46% on 25Mbps is more than double Labor's prediction and this is most likely due to Telstra not offering a 12Mbps plan.
The result of this is that innovation has stalled because 79% are choosing the slow plans that don't offer access to the 100Mbps required for the new applications promoted by Labor in the NBNCo Corporate Plans. 1Gbps plans are available from NBNCo but RSPs are not selling them because a viable price point is simply not possible. Worse still congestion exists at the interconnect between NBNCo & RSP networks because of the high CVC prices. Labor succeeded in building a 1Gbps network on which nobody can connect at that speed because it is too expensive and a network that has extensive congestion issues because of high CVC prices.
If Labor had chosen cheap connection charges and no speed tiers, then connection speeds would be less predictable because of congestion issues especially during peak time but burst speeds could reach 1Gbps. RSPs could have innovated by offering higher quality services (e.g. plans that prioritised packets) or traffic shaping based on usage (e.g. old Internode FlatRate plan). End-users would have the option of either shaping their behaviour by using the internet in off-peak times or paying extra for higher priority.