NBN Co confirms it will subsidise access and service charges

9 Aug 2011

NBN Co, the public-private partnership set up to oversee the construction and management of Australia’s National Broadband Network (NBN), has revealed that it will now subsidise upfront access and service charges for operators until enough customers are connected to cover any respective operating costs. According to The Age, the decision comes on the back of pressure to lower start-up costs from a number of smaller retail-focused internet service providers (ISPs), which had complained about a speed and data charge that was required in order to start offering services, regardless of how many customers a company had connected to the in-deployment fibre infrastructure. Under the revised plans, operators will now be offered a rebate of up to AUD3,000 (USD3,105) by NBN Co for its connectivity virtual circuit (CVC) charge until at least 30,000 premises are connected to an exchange. Commenting on the revised pricing plans, Jim Hassell, NBN Co’s head of product development, noted: ‘This move is aimed at lowering the barriers to entry for [service providers] and we expect it to promote retail competition and service innovation, leading to flow-on benefits for consumers. The rebate will give service providers a lower-cost opportunity to enter a geographic area, and build their customer base in the early days.’ One of the more vocal critics of the CVC charge, alternative broadband provider Internode’s chief executive Simon Hackett, welcomed the move, saying: ‘This is a positive outcome that has resulted from constructive interaction between NBN Co and industry around the NBN Co access pricing model.’

The CVC runs between the NBN Co exchange and fibre access node, and any operator looking to provide a 100Mbps service – the maximum downlink speed that will be available for retail customers – is required to purchase at least 200MB; operators can purchase less CVC, but would not be able to offer peak speeds. With connectivity priced at AUD20 per megabit per month, prior to the announcement of the subsidy it meant that operators were looking at an AUD4,000 monthly charge, regardless of how many customers they managed to sign up.

Australia, Internode, NBN Co