Aussie Broadband has announced that it believes that Australian NBN service providers will either have to increase prices or reduce service quality once NBN’s Coronavirus CVC bandwidth boost finishes in mid to late August 2020.
Managing Director Phillip Britt said Aussie Broadband has seen its customers settle into a pattern of using about 10% more bandwidth than originally predicted pre-COVID, and believes this reflects permanently changed behaviour.
“Not surprisingly, people have become used to using their internet for more things and on more devices – whether it be working and schooling from home, streaming entertainment or shopping online or anything else,” said Phil.
“NBN’s extra 40% CVC bandwidth to cope with peak demand during COVID certainly cushioned the impact, but once it’s gone, we don’t believe traffic levels will return to original forecasts even without areas of the country going in and out of lockdown.
“Given that telcos pay overage for CVC usage above the amount bundled into their NBN wholesale products, this puts them in a difficult situation.
“They will either need to raise retail prices to keep the service levels the same in peak time speeds, or lower peak time speeds to maintain at least some level of margin – which is almost non-existent as is.”
Phil said the free CVC offer during COVID was a huge benefit to the nation.
“l believe the NBN saved both retail providers and the nation by doing this,” he said. “Without this additional capacity, peak time speeds would have been significantly impacted.
“Most providers are still provisioning large amounts of CVC and when the offer finishes in mid-late August, they will need to adjust back. I believe this will have an impact on peak time speeds because there isn’t any more to give without raising retail prices.”
“I make no argument against NBN charging retailers appropriately. NBN obviously needs to continue to generate income to continue to maintain and upgrade the network.
“However, I believe that we need to scrap CVC and move to a single access charge based on the speed tier chosen, with no usage or CVC component. Not only does it simplify everything, but it also gives telcos more certainty in how they can set prices.
“Many other countries operate this way, including New Zealand. CVC is something that appears to be unique to the Australian market.
“If it remains, I strongly believe we will soon be back to the early days of NBN when providers either skimped on CVC so customers experienced woeful peak hour speeds, or they had to charge prices higher than many customers were willing to pay, or they concentrated on customers who were not large users of bandwidth.
“Alternatively, we will see telcos pushing customers even harder onto rival services, whether it be their own private networks or mobile. Something has to give.”