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Australian ISP chief criticises NBN over pricing

Australian ISP Internode claims that the NBNCo's wholesale pricing is pushing retail prices too high

The head of Australian ISP Internode has criticised the NBN Co. for its pricing model. Internode chief executive Simon Hackett said in a blog post that despite government promises that Australian consumers would pay similar prices for access to the fibre-optic based NBN as they do for xDSL, in practice it would cost considerably more.

The comments come as the ISP becomes the first to give Australians a glimpse of retail prices for accessing NBN services.

“Unfortunately, a number of pressure points in the wholesale pricing model exist which will make these promises (from the government) untenable in practice, unless serious issues with the underlying pricing model are addressed by NBNCo and the ACCC,” Hackett wrote.

According to Internode’s released figures, a bronze package providing a 12Mbps download connection and 1Mbps up with a 30GB data cap will cost A$59.95, while a Gold package offering 50Gbps down and 20Mbps up will cost $79.95 with a 30GB cap. Users will be able to pay extra to increase their data cap, with 200GB taking the cost of the Gold package to A$99.95.

To reduce costs Hackett suggests that the NBNCo remove a A$20 per megabit per month fee on its ‘CVC’ (Concentrating Virtual Circuit), charged at the point where retails service providers connect to the NBN. Instead, “NBNCo merely need to provide the first 200 megabits of CVC capacity free of charge, and to impose the $20 per megabit CVC charge only for all CVC expansion above that initial 200 megabit size. NBNCo have a stated intention of reducing the CVC ‘per megabit’ rate in later years of the network lifetime, and delivering 200 megabits per CVC without initial charge would simply mean that the point at which CVC per-megabit rates reduced would be delayed to a reciprocal extent.”

Hackett claims that the CVC charge has simply been chosen to fill in an otherwise huge hole in the federal government policy requirement that the network return funds to the commonwealth at a commercial rate and in a short timeframe”.

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