Flat-Rate Pricing Boosts Gigabit NBN Services for Consumers

The Australian Competition and Consumer Commission (ACCC) recently released its routine Measuring Broadband Australia (MBA) report [pdf], revealing that the elimination of backhaul charges on plans exceeding 100Mbps had the most significant effect on NBN Co's top-tier services.During peak hours, the report observed a substantial improvement, with these services transitioning from a wide range of speeds, ranging from 686Mbps to 851Mbps in September 2023, to a narrower band between 818Mbps and 851Mbps.

The contentious Connectivity Virtual Circuit (CVC) charges within the NBN tariff structure have been a topic of debate. Under this construct, retailers were subject to charges for both the service provided to individual customers (the Access Virtual Circuit, or AVC) and the backhaul supporting all customers in the serving area (CVC).In the latest Special Access Undertaking (SAU) proposed by NBN Co and approved by the ACCC, the CVC charges for higher-speed services were eliminated, with a gradual phase-out planned for sub-100Mbps services.Retailers have long expressed dissatisfaction with the CVC model, arguing that it incentivized under-provisioning of backhaul. This sentiment appears to be validated by the observed performance improvements following the removal of CVC charges.

The impact of the new CVC-less pricing model was less pronounced at lower speeds. While ultrafast users experienced a maximum speed increase of nearly 20 percent, the ACCC noted that peak-hour download performance for users on 100Mbps and 250Mbps fixed-line plans saw only a marginal improvement compared to September measurements.An NBN Co spokesperson confirmed that the ACCC's report aligns with the company's own network observations, stating, "I can confirm the ACCC’s report is accurate and aligns with our network monitoring.”The spokesperson further emphasized the operational benefits provided to retail service providers through the special access undertaking process, highlighting that the utilization-based billing system removes the daily CVC management tasks that providers previously had to undertake.

Currently, over 2.5 million operational services on the NBN network experience no level of Connectivity Virtual Circuit (CVC) congestion, ensuring uninterrupted connectivity for users. NBN Co implemented a strategic decision "a couple of years ago" to proactively over-provision download speeds, a move that has significantly benefited users. As highlighted in the Measuring Broadband Australia (MBA) report, the majority of customers consistently enjoy download speeds surpassing 100 percent of the maximum wholesale speed, indicative of the network's robust performance and reliability.

The MBA report relies on data collected from "white boxes" installed in volunteers' homes, serving as a comprehensive source of performance metrics. Compiled by the reputable UK-based firm SamKnows, now part of Cisco, the report provides valuable insights into the NBN network's performance, ensuring transparency and accountability in service provision.In the sample analyzed, there are 1279 services with speeds of 500Mbps and below, while 236 services have speeds of up to gigabit. The report's appendix indicates nearly 500 participants with 100Mbps services and 122 with 250Mbps services.

Compared to the data reported by the ACCC in its regular wholesale market indicators, aside from the predominant 100Mbps segment, the numbers align favorably. According to the ACCC's study, there were approximately 315,000 100Mbps Access Virtual Circuits (AVCs) in December 2023, along with 6900 250Mbps AVCs, 1300 500Mbps AVCs, and 1076 gigabit AVCs.