NBN Co’s CVC-pricing leaves RSPs with much to digest

RSPs will meet at a roundtable next week to discuss NBN pricing.

Telstra, Optus, TPG and Aussie Broadband expressed cautious optimism after the release of a flat-pricing model by NBN Co on Monday.

For more than a year, RSPs have asked NBN Co to simplify its wholesale pricing and to scrap a variable bandwidth charge called the connectivity virtual circuit (CVC).

NBN Co offered one potential AVC-only model and one halfway model on Monday, but both would mean immediate price hikes of between $5 and $20 a month, and then an “indexed” increase above the inflation rate every year after.

The level of the yearly increase could not be quantified, and there are indications already that could be an early sticking point as RSPs prepare to meet with the Australian Competition and Consumer Commission (ACCC) and NBN Co next week to discuss the proposal.

“This proposal is an important step in reviewing NBN Co’s pricing, but it is not yet clear if it will deal with the significant challenges retailers and customers are facing,” a Telstra spokesperson said.

“We are concerned [at] NBN Co doing away with CVC but merely making this cost up by increasing costs to RSPs in other areas.

“We need to look at pricing comprehensively and ensure that there is a framework which addresses NBN Co’s market power going forward.”

TPG Telecom group executive for legal and external affairs Trent Czinner said TPG is “considering the detail of NBN’s proposal.”

“We have been advocating for a simpler pricing model that would provide certainty for resellers and customers and we are pleased to see NBN finally putting forward a flat rate charging model for discussion,” Czinner said.

Aussie Broadband’s managing director Phillip Britt likewise said his company is “still digesting the proposal, but we’re pleased that NBN is consulting on this. 

“We’re looking forward to having an open and frank discussion on the topic at the ACCC roundtable next week,” Britt said.

The existence of a flat-price, CVC-less model represented progress, according to Optus vice president of regulatory and public affairs Andrew Sheridan.

“NBN Co finally initiating a discussion around fixed wholesale pricing is a huge step in the right direction,” Sheridan said.

“Optus looks forward to pursuing better customer outcomes by working with NBN Co and industry as part of the ACCC’s review.”

A Vocus spokesperson said that the government’s “reluctance to deal with [the] financial reality [of the NBN project] has led us down a path of legislation protecting NBN Co from competition, and the introduction of monopolistic and non-market-led wholesale pricing.”

“NBN pricing should be set with two outcomes in mind: first, it should be set in the best interests of all Australian consumers and businesses by enabling reliable and affordable connectivity,” Vocus’ spokesperson said.

“Second, it should support a sustainable market for RSPs to provide competitive services.

“Viewed through the lens of these two desired outcomes, NBN’s pricing is not fit for purpose.”

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Lisa is avid technical blogger. Along with writing a good articles, She has close interests in gadgets, mobile and follows them passionately.

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