NBN telco discounts help clear network congestion

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The NBN’s wholesale pricing shuffle has already seen a great impact for consumers, easing congestion and improving the overall user experience, according to the company behind it.

NBN Co claims that congestion on the network has fallen from nearly five hours to 12 minutes per week from February 2017 to February 2018. It also insists that just one in a thousand homes now experience slow speeds. This comes after the company started dishing out discounted wholesale rates to telcos.

Retail providers such as Optus and Telstra are dealt a wholesale rate by the NBN Co to then offer their own NBN plans. The wholesale rate is made up of AVC – the monthly access price. In December 2017, NBN Co cut the AVC rate on the 50/20 speed tier from $34 to $27.

NBN Co also discounted the CVC rate by 50 per cent. CVC stands for connectivity virtual circuit and is the rate telcos pay to move data from the NBN to their own networks. While the exact CVC rate is unknown, the discounts mean telcos can push faster plans with more bandwidth for cheaper end costs to users.

NBN Co CCO, Brad Whitcomb, said the uptake in higher speed plans has drastically lowered congestion on the network.

“We are on track to have nearly one-third of our customers on wholesale speed of 50 megabits per second and above by the end of the fiscal year… we have made it more attractive for retailers to buy more CVC and we are excited to see the congestion taken out of the system,” Mr Whitcomb said.

NBN Co records congestion levels for individual retailers, but does not make this information public. An ongoing ACCC inquiry could shed some light on which telcos are performing better than others.

NBN Co does not aim to keep customers in the dark, however, according to Mr Whitcomb.

“We will continue to keep the Australian public abreast of the initiatives being undertaken to ensure continued improvement,” he said.

Despite this, NBN Co does not plan to make the wholesale discounts permanent.

Mr Whitcomb said: “We have no plans to keep the promotions on permanently… we are working closely with the RSPs to roll off the promotional program and into a new pricing structure.”

Could mobile data replace NBN?

5G mobile data is scheduled for rollout in Australia in 2019, and already phone providers are poised to offer lots of data for a comparatively little price. Providers such as OVO Mobile and other small mobile virtual network operators (MVNOs) offer 100GB of mobile broadband for around $70 a month.

Last week Optus briefly flirted with unlimited data mobile phone plans. It quickly withdrew the offer from its website after 24 hours, but information about the plans can still be found on the site. Despite the technically unlimited data offer, speeds were limited to just 1.5Mbps – hardly enough for most internet uses.

5G internet could deliver speeds upwards of 1Gbps, but the cost remains a concern and the network will be subject to congestion just like any other. Vodafone’s CEO has downplayed hype about the 5G network, saying it won’t replace NBN for home internet anytime soon.

Canstar Blue research indicates that 79 per cent of consumers find their NBN speeds adequate, while customers spend on average $78 a month on their NBN plan. Just 46 per cent had an unlimited data plan.

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