A smattering of thoughts on the new bundled CVC pricing

I’m a bit busy at the moment, but I thought I’d put together a few of my initial thoughts and questions on the new CVC pricing.

Thanks to a handy-dandy embargo, there are already a plethora of articles around detailing NBN Co’s new (proposed) pricing construct this morning… so, I won’t bore you with the exact details of the changes.

But if you’re not already up to speed, naturally I’d recommend a read of Angus Kidman’s article on the changes on finder.com.au… but this time, it’s also because it includes an analogy to pots and stovetops.

If that doesn’t float your saucepan, other articles are just a quick search away.

Back of napkin calculations

nbn™ 50

The new nbn™ 50 AVC with 2 Mbps of bundled CVC comes in at $45 ex GST vs $34 ex GST currently but with only 50 kbps CVC bundled1.

So the cost difference of $11 ($45 – $34 = $11) is what an RSP would have spent on CVC under the current model. Assuming the industry average charge of $14.25 per Mbps2, the $11 left over would allow them to purchase 0.77 Mbps ($11 / $14.25 per Mbps = 0.77 Mbps).

Since the new nbn™ 50 comes with 2 Mbps, this represents a 1.6x increase in CVC allocation per user for the same price. Not bad.

nbn™ 100

On the other hand, the new nbn™ 100 looks nowhere near as generous.

The new nbn™ 100 AVC with 2.5 Mbps of bundled CVC comes in at $65 ex GST vs $38 ex GST with the 50 kbps CVC credit bundled1.

Doing the same calculations as before, this leaves $27 for CVC under the current model. This is equivalent to ~1.89 Mbps of CVC using the industry average rate1, or a 0.3x increase in CVC allocation per user for the same price currently. That’s tiny.

Given this, I wouldn’t expect the take-up of the new nbn™ 100 product to be huge. The new construct effectively forces RSPs to buy at least 2.5 Mbps of CVC per user all year, all around… which could be a problem.

This constraint will likely deter providers (especially those in the low-cost market) from selling a 100/40 product since: a) CVC-equivalent cost per user is likely above the current annual CVC average cost per user on a 100/40 retail offering, and; b) it gives RSPs no flexibility to reduce CVC in the low-demand season.

Remember, bandwidth requirements can fluctuate seasonally — usually peaking during school holidays.

If NBN Co were to retire the current separated AVC/CVC product set completely (which, by the way, it has NOT said it would do), I’d be surprised to see any 100/40 Mbps plan priced under $110 retail.

More questions

The articles about the pricing changes so far are light on details. So, naturally, I have a few questions about the mechanics of the new products:

CVC mixing for bundled and unbundled products?

An interesting question is whether NBN Co will allow mixing existing unbundled and new bundled products in the future. I doubt they would — otherwise, providers will just buy a bunch of new nbn™ 50 products and allow other customers on the non-bundled AVCs to free-load off the bundled CVC.

How will Dimension-based CVC discount be calculated?

On the front of the Dimension-based CVC discount: if NBN Co allows both bundled and unbundled products to co-exist, will the average CVC allocation per user be calculated across both bundled and unbundled products?

If they don’t, RSPs may no longer be able to afford to offer services to low usage users. These users might cost RSP too much to bump up to the new product set, but since the average CVC per user in the unbundled segment has plummeted, it may cost them too much to leave on the unbundled segment as well.

But if they do, the unbundled products could end up hurting NBN Co’s bottom line more as NBN Co will likely have to pay out more of the dimension-based CVC Discount to RSPs who adopt the new bundled products but also retain a good smattering of unbundled products.

A word on industry average CVC

Note that I am using the industry average1 CVC pricing here as the benchmark.

Even if an RSP allocates more CVC per user on higher speed tiered AVC, the current dimension based CVC discount is calculated on the average CVC allocation per user across all CVCs — making the average a realistic comparison benchmark for most RSPs unless they skew significantly from average.

If they currently allocate more CVC per user than the industry average, the apparent savings under the new structure would be smaller because of the current Dimension-Based Discount.

Conversely, if they allocate less CVC per user than the industry average, the apparent savings under the new structure would be greater.

1 Currently, each AVC comes with a 50 kbps CVC credit. Since it’s such a small amount, we might as well disregard for the purpose of this discussion.
2 Industry average based on ACCC NBN Wholesale Market Report. Average CVC per user is 1.09 Mbps, falling within the 1000 to 1149 kbps bracket in NBN Co’s dimension based CVC discount. This is equivalent to $14.25 per Mbps of TC-4 CVC ex GST.

NBN Co releases third broadband agreement

Drops the “Co” and “Bitstream Service” from product name, but retains pricing structure

NBN Co, the company responsible for building and operating the National Broadband Network, released the third version of its Wholesale Broadband Agreement (WBA3) last Friday.

In the new agreement, the company renamed its main product previously known as “NBN Co Ethernet Bitstream Service” (NEBS) to simply “nbn™ Ethernet”.

The new agreement also combines several documents including the product description, technical specifications, price list and fair use policy into a single document now known as the “WBA nbn™ Ethernet Product Module”.

In a separate media release published on the NBN Co website, the company also revealed it plans to trial a new appointments system.  The new system will allow end users to reschedule appointments with installers directly, rather than having to contact through their service provider.

Pricing structure remains unchanged for now

Despite having recently consulted with its retail partners to make changes to current two-component pricing structure, the company did not include a new pricing structure in this version of WBA3.

The company has indicated it will reveal its intentions for the new pricing structure by the end of the year.

NBN Co to trial traffic lights services

Releases technical trial agreement for services to “non-premises transport infrastructure sites”

NBN Co, the company responsible for building and operating the National Broadband Network, has released a new test agreement to test the feasibility of using NBN services to connect transport infrastructure sites like traffic lights and cameras.

According to the test agreement, the trial is set to begin on or around 27th November and will run for approximately 17 weeks.

NBN Co plans to provide test services in New South Wales, Victoria and Queensland.  Service providers will also need to enter into an agreement with the relevant transport authority in each state to participate in the trial.

Only FTTN and FTTP to be tested

As part of the trial, NBN Co will only test the feasibility of two access technologies in the Multi-Technology Mix.  NBN Co will extend its Fibre to the Node (FTTN) and Fibre to the Premises (FTTP) networks to agreed test sites.  However, the company’s third fixed-line access technology HFC will not be part of the trial.

The trial will also make use of a new FTTP small form-factor network termination device (SFP NTD) rather than the standard issue F-NTD used in standard premises.

nbn launches satellite mobility product

Proof-of-concept Wi-Fi trial with Qantas becomes commercial product

Last Friday, the company responsible for building and operating the National Broadband Network (nbn) launched its Large Commercial Passenger Aircraft (LCPA) Satellite Mobility product.

After trialing a proof-of-concept aeronautical satellite product with Qantas earlier this year, the company has released commercial supply agreements including product descriptions and pricing.

Pricing model

nbn will charge satellite mobility (LCPA) customers at a significant premium for both its access and connectivity compared with the standard NEBS (NBN Ethernet Bitstream Service) Satellite product.

On the connectivity side, the Mobility-CVC (M-CVC) will cost $2,310 per Mbps with a minimum order of 100 Mbps. This is compared to $17.50 per Mbps per month for the NEBS product plus a $200 NNI charge.

On the access component, nbn will charge $9,060 per month for each aircraft’s Mobility Beams Virtual Circuit (MB-VC).

Pricing table for nbn’s new Satellite Mobility (LCPA) product (Source: nbn co)

NEBS given traffic priority

nbn states in its LCPA agreement that residential and business customers using the standard NEBS (NBN Ethernet Bitstream Service) product will be given traffic priority over satellite mobility customers.

During any capacity congestion or contention event, nbn will use a Weighted Fair Queuing algorithm to prioritise NEBS traffic over Satellite Mobility product traffic.

The agreement says that, as a result, LCPA traffic will “be adversely affected by nbn™ Ethernet (Satellite) traffic”.

nbn will prioritise traffic from the standard NBN Ethernet Bitstream Service (Satellite) over Satellite Mobility (LCPA) traffic (Source: nbn co)

Standard satellite product also revamped

The LCPA launch comes as nbn revamped its satellite offering for residential and business customers in rural and regional Australia this month. The satellite fair use policy has been relaxed with data allowances doubled across the board.

nbn to pay RSPs for HFC NTD installation

$26 rebate up for grabs for service providers who mail their own NTDs or perform their own professional installations

nbn, the company responsible for building the National Broadband Network, is incentivising retail service providers (RSPs) to provide their own HFC NTD installation or delivery mechanisms.

Last week, nbn released its updated Wholesale Broadband Agreement for July, which includes a new $150 installation fee for the HFC NTD.

Documents published by the network builder today reveal that service providers can participate in business readiness testing (BRT) for more HFC Installation Options. These include HFC NTD delivery or installation by service provider.

A rebate of $26 (excluding GST) will be provided by nbn to participating service providers when they attempt to deliver a self-installation HFC NTD kit to end users or a professional installation is performed.

In addition to the rebate, the professional installation fee will be waived by nbn since the service provider is providing the installation at their own cost.

nbn says this rebate is to help “contribute to [service provider’s] costs associated with […] managing a Customer Professional Installation – HFC or Customer Dispatch NBN Co Self-Install Kit – HFC for the duration of the HFC Installation Options BRT”.

The rebate will be paid for successful activations or when an activation attempt was made and the provider’s overall activation failure rate is less than or equal to 1.5%.

nbn has not specified an end date to this testing agreement.

[Source: nbn]

nbn to charge for HFC NTD install from July

Customers with existing Telstra or Foxtel cable service given self-install option by default

nbn, the company responsible for building the National Broadband Network, will start charging an HFC NTD installation fee from July this year.

This comes as nbn finalises its self-install model which sees end users being mailed their own Network Termination Device in premises with an existing cable installation.

According to its updated WBA price list, nbn will give end users an option of a free self-install kit or a professional install charged at $75 per hour for a minimum of 2 hour (minimum charge $150) excluding GST.

The self-install kit will include a splitter, coaxial cable and the Arris modem acting as the NBN Network Termination Device.

Customers who do not have existing coaxial cabling connecting to the cable network will still be provided with a free initial standard installation.

Missing HFC modems

Unlike NTDs found on nbn’s Fibre or Fixed Wireless networks, the HFC NTD modem is not a wall-mounted installation making it easy for end users to mistakenly remove the devices when moving homes or businesses.

nbn have established that when an HFC Network Termination Device is missing, the new end user will have to request a professional install charged at the same $75 per hour rate for a minimum of 2 hours.

Additional data connections over HFC

Unlike other access technologies on the National Broadband Network with an NTD, the HFC modem only has one active port.

In order to order a second data service, end users will need to order a second Network Termination Device either through a self-install kit or a professional install.

End users with 3 or more existing RF signal terminating devices (such as a cable TV box) will be required to pay a subsequent installation fee charged at $270, plus a labour rate of $75 per hour and any additional material costs.

[Source: nbn]

Could TPG end up partially subsidising NBN for Qantas Wi-Fi?

NBN Co placed in a potential conflict of interest under new regional broadband tax

Earlier this year, I made a submission to the Government’s consultation on the Telecommunications Reform Package.

I’ve been meaning to write a summary for some time.  I thought I’d whip one up together after it was announced that the Government planned to introduce the legislation next month despite not responding to the submissions.


As part of the reform package, the government planned to introduce a $7.09 charge per line to most fixed line “superfast” broadband services (defined as 25 Mbps download speeds or greater).

This is to help subsidise the cost of nbn’s fixed wireless and satellite networks — primarily servicing regional and remote communities around Australia.

The NBN fixed line footprint is expected to be the primary contributor of the tax.  However, other operators such as TPG with its fibre to the building network will also be hit.

NBN Co’s commercial interest

The problem is that the NBN satellite network is no longer solely about the delivery of broadband services to regional areas.

It now has other commercial interests — including the Satellite Mobility product which allows commercial entities like Qantas to tap into the satellite network for the delivery of in-flight Wi-Fi.

This could mean that a provider like TPG could be paying taxes which help subsidise the provisioning of Wi-Fi services on a Qantas aircraft.

No restrictions on subsidy for regional broadband only

The proposed bill had no restrictions that the funding must only be used to provision broadband services to regional areas — as I explained in 2.1.5 and 2.1.6 of my submission.

So, NBN Co is placed in a conflicting conundrum.  It can spend its subsidy funds on improving the quality of satellite services to regional communities like relaxing the Fair Use Policy with no additional revenue.

Alternatively, it could spend it on developing new revenue streams through commercial products like the Satellite Mobility product — competing with the likes of Optus who also have satellites in the sky.

My suggestions?

In my submission, I suggested:

  1. The Bill should make clear that the funding made available through the Regional Broadband Scheme is not available for services where the primary purpose is not to deliver broadband to regional communities.
  2. The strict Fair Use Policy (FUP) imposed by NBN Co on its Satellite network means the quality is still not directly comparable to fixed-line super-fast broadband services.As a condition of the Regional Broadband Scheme funding, the funding recipient should prioritise upgrades to the capacity and service reliability of rural and regional customers over the development of supplementary products like the Satellite Mobility product.
  3. Ensure similar protection is afforded to services delivered by means of the NBN Fixed Wireless network.

Full submission

TPG licences hint at LTE fixed wireless trial in Bendigo

New 3.6GHz “point to multipoint” licence at existing Vodafone tower suggests trial LTE deployment

Australia’s second largest telco, TPG, was granted a number of apparatus radio licence covering parts of the Bendigo area in Victoria.

These new licences, issued on 21 March 2017 by the ACMA, are in addition to the spectrum licences owned by TPG to operate in the 1800 MHz and 2.5 GHz bands.

Whilst apparatus licence are typically issued for one year, the TPG licences are only valid until late October this year — hinting at a short-term trial.

(more…)

Qantas to sign trial satellite product with NBN for Wi-Fi

nbn co and Qantas set to begin a proof-of-concept agreement to test the delivery of a on-board Wi-Fi from February 2017

The company responsible for building the National Broadband Network, nbn, has released its test agreement with Qantas allowing them to test a “Proof-of-Concept Aeronautical Mobile Satellite Service” on a Qantas test aircraft.

The proof-of-concept test is expected to help guide the development of nbn’s Satellite Mobility Product expected to launch in the third quarter of 2017.

Qantas has already begun preliminary engineering testing of its proposed on-board Wi-Fi product on a Boeing 737 aircraft (VH-XZB). The national carrier intends to partner with service provider ViaSat to deliver on-board Internet connectivity once the mobility product becomes available.

The trial product will be delivered over a Layer 3 VPN connection over the NBN Satellite Network. nbn will be responsible for the network between the Air Network Interface (ANI) located on the test aircraft’s Air Terminal and the Mobility Network-Network Interface (M-NNI) located at the NBN Point of Interconnect (POI).

As part of the trial, the network speed will be limited to 20 megabits per second for each aircraft on at most two aircrafts concurrently. The connection will also be limited to agreed flight corridors.

Earlier analysis by jxeeno blog has concluded that on-board Wi-Fi products are likely to have little or no impact on the congestion of beams given the short duration of time each aircraft spends under a single beam.

The proof-of-concept agreement is set to kick in from 1st February 2017 and is expected to run until 1st September 2017 unless terminated early or extended. However, Qantas is yet to officially announce its public launch date for the on-board Wi-Fi service.

nbn™ logo (large)

nbn introduces DOCSIS 3.1 NTDs this month

No high-speed tiers to accompany launch of higher speed network

The company responsible for building the National Broadband Network, nbn, is set to begin installing new HFC Network Termination Devices (NTDs) at the end of this month to allow them to connect to the upgraded DOCSIS 3.1 network.

nbn’s NTD is a customised CM8200B DOCSIS 3.1 modem from Arris, who successfully won a tender to supply the network equipment.

nbn's new HFC Network Termination Device capable of DOCSIS 3.1
nbn’s new HFC Network Termination Device capable of DOCSIS 3.1 (Source: nbn co)

nbn had initially planned to begin deploying its DOCSIS 3.1 NTDs in December 2016. This has been pushed back by a month to the end of January 2017, with the company issuing an amendment to its Wholesale Broadband Agreement (WBA2).

In their notification letter to Access Seekers, nbn states that it intends to “introduce the new CM8200B (DOCSIS 3.1) HFC-NTD deploying on all HFC installations from end January 2017”.


No speed increase despite upgrade

Despite touting the speed capabilities of the new DOCSIS 3.1 modems, nbn will not launch new speed tiers to accompany the launch of the new modems.

In November 2015, nbn’s Chief Technology Officer penned a blog post saying that new modems by Arris will be capable of delivering “a stunning 5Gbps downstream and 2Gbps upstream”.

However, the maximum speed tier nbn will offer over the HFC network will remain at 100/40 Mbps. The January 2017 Integrated Deployment Plan also shows no future plans to introduce higher speed tiers already available the NBN Fibre network.

DOCSIS 3.1 promises to provide improved network performance and speeds through increased modulation orders and wider spectrum utilisation.

The new NTD will also have a second Ethernet port, however, the port will be disabled and covered by a sticker at launch.