NBN’s New Pricing System Aims To Reward ISPs For Larger Data Plans

NBN’s New Pricing System Aims To Reward ISPs For Larger Data Plans

NBN today announced a new “discount model” to be introduced in June, which will run for the next two years. The pricing structure is applicable to NBN’s Connectivity Virtual Circuit (CVC) charge to ISPs selling services to customers — the cost will be continually lowered over time as ISPs sell larger quota data plans to customers.

NBN says the new model, known as Dimension Based Discount (DBD), “responds to the rapid increase in data consumption by Australian consumers and aims to reward retailers with a discount for delivering a better customer experience through the better allocation of CVC to end users”.

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The new discount-based model is calculated quarterly on the average CVC bandwidth assigned by all retailers to all end users on the NBN network at an industry level — the more CVC bandwidth provisioned per end user, the bigger the CVC pricing discount available to the industry.

Speed Cost per 1Mbps
0Kbps to 399Kbps $17.50
400Kbps to 549Kbps $16.75
550Kbps to 699Kbps $16.25
700Kbps to 849Kbps $15.75
850Kbps to 999Kbps $15.25
1,000Kbps to 1,149Kbps $14.50
1,150Kbps to 1,299Kbps $13.75
1,300Kbps to 1,449Kbps $13.00
1,600Kbps and above $11.50

This system “aims to encourage retail providers to deliver a higher quality service” NBN says.

“We know more bandwidth can mean a better broadband experience for homes and businesses, so we are excited to evolve our CVC pricing model for our retailers,” NBN CEO Bill Morrow said in a statement today.

“The broadband market is changing and consumption continues to boom. We have seen average usage on the NBN network increase from 75 gigabytes in February 2015 to 125 gigabytes today.

“We know increased usage has presented challenges to our retailers, and we have consulted with them on a new CVC pricing model that creates greater flexibility and opportunity for the industry – acknowledging that broadband use is expanding.”

“The model aims to encourage our retail providers to better dimension their network, and help retailers to provide a better broadband experience for homes and businesses,” said Morrow.

“We do not plan to stop here. We see the DBD model evolving further and ideally being applied directly to each retailer rather than an industry level. We will continue to evolve it in close consultation with our customers.”

NBN says the new model is the result of a six-week industry-wide consultation and aims to continue to provide retail service providers with cost certainty of NBN’s pricing structure.

The feedback received during the consultation was supportive of the tiered discount approach.