- NBN Co said it believes that the removal of CVC will incentivise internet retailers to create retail offers that will encourage customers to upgrade to higher-speed tiers.
- “NBN Co’s long-term strategy is to increase utilisation of the network and deliver revenue growth from the sale of more higher speed products, rather than achieve revenue growth from wholesale price rises, which is a win for customers, internet retailers, and NBN Co.”
- “Retaining AVC and CVC bundled pricing on entry-level and mid-tier products will help to maintain a diverse range of affordable retail plans for customers,” NBN also said.
The details of the long-awaited Special Access Undertaking variation of NBN Co have been finally released. Under the SAU, major reforms to its wholesale prices and data inclusions are proposed, beginning with the removal of CVC from Home Fast and all 100Mbps and higher speed tiers. It will also charge for CVC based on actual usage rather than based on forecasts.
NBN Co said it believes that the removal of CVC will incentivise internet retailers to create retail offers that will encourage customers to upgrade to higher-speed tiers. “NBN Co’s long-term strategy is to increase utilisation of the network and deliver revenue growth from the sale of more higher speed products, rather than achieve revenue growth from wholesale price rises, which is a win for customers, internet retailers, and NBN Co.”
“Retaining AVC and CVC bundled pricing on entry-level and mid-tier products will help to maintain a diverse range of affordable retail plans for customers,” NBN also said.
“It is designed to give internet retailers the option to create and differentiate products based on their customers’ specific needs. Removing CVC from these plans would undermine the incentive structure that NBN Co is seeking to create within the overall pricing construct and would likely result in elevated wholesale and retail prices for entry-level and mid-tier products.”
“In addition, retaining CVC pricing for these bundled offers helps NBN Co to materially reduce access price of the network for consumers that only have basic connectivity requirements, including voice-only and low data use customers.”
“The company is proposing the price controls on a ‘use it or lose it’ basis for each financial year and are intended as a modest counterbalance to the significant concessions and revenue risk that NBN Co is exposed to by offering AVC-only pricing on NBN Home Fast and above,” NBN also said.
“In proposing its new pricing framework, NBN Co is taking on significant commercial risk as the network wholesaler. The company recognises that it will need to balance this commercial risk with greater price certainty and the expectation from retailers and customers that it continues to upgrade the capabilities of the network to deliver greater speed and capacity, which will require signiβicant ongoing capital investment. We are making commitments to increase capacity inclusions on bundled offers twice a year in response to observed usage growth and to maintain the performance of shared network elements,” NBN further added.
“To ensure NBN can continue to invest in network upgrades that will deliver faster speeds, greater capacity, and less congestion, it is important that NBN retains the opportunity to recover over time the costs of building, operating, and enhancing the network over the remaining term of the SAU. Anything less – and any regulatory uncertainty – not only puts at risk future investment in the NBN, it could also set a precedent that devalues and undermines future investment in other regulated public and private infrastructure assets across Australia,” NBN Co also said.
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