poi

NBN working on AVC trunking project to overcome 121 POIs

Kenneth Tsang 2 Comments

For a small fee, nbn could allow small service providers tap into its transit network to drive up backhaul market competition

nbn, the company responsible for building the National Broadband Network, has reportedly been working with smaller service providers in developing a so-called “AVC trunking” service.

Currently, service providers are required to connect their network with nbn‘s 121 points of interconnect located around Australia in order to service all of Australia.  This puts smaller service providers who do not have existing backhaul networks at a big disadvantage.

This AVC trunking project aims to allow smaller Tier 2 service providers to take advantage of nbn‘s inter-POI (point of interconnect) transit network by paying a small fee to terminate Access Virtual Circuits (AVCs) from smaller or more remote Points of Interconnect to larger depots located in capital cities.

ACCC seeks feedback from small providers

The Australian Competition and Consumer Commission (ACCC) has interviewed a number of small service providers to obtain feedback regarding nbn‘s AVC trunking project.  It’s understood that feedback from small service providers has been overwhelmingly positive.

Paul Rees, Managing Director of the ISP SkyMesh, has noted on Whirlpool Broadband Forums that: “Unless the ACCC approves this scheme, or the larger providers start offering backhaul at realistic prices, we’ll never make it to Tasmania, the Northern Territory or far north Queensland. If the ACCC is serious about maintaining competition on the nbn™ network, they will approve [CVC Trunking].”

A consolidated backhaul market

When the NBN was first established, NBN Co had preferred a 7+7 Point of Interconnect model where service providers would connect to major interconnection points in capital cities to service an entire state.  However, after lobbying from major backhaul monopoly providers from the likes of Telstra and Optus — the ACCC favoured a dispersed 121 Point of Interconnection model.

Since the ACCC decision, major acquisitions by TPG and M2 have resulted in significantly reduced competition in the backhaul market.  Most notably, TPG’s acquisition of PIPE Networks and AAPT, plus the recent Vocus-M2 merger sees almost all major backhaul providers aligning with a company with a consumer retail front.  This could allow the companies to increase wholesale backhaul costs to their competitors to lock out retail competition.

By opening up nbn‘s inter POI transit network to the AVC trunking project, it could drive backhaul competition especially to regions with less transit competition such as Tasmania and Northern Territory.  The implementation of any such project would be subject to approval by the ACCC.

NBN technicians

Nextgen’s NBN aggregation closes: should we reconsider 121 POIs?

Kenneth Tsang 1 Comment

As a wholesale service provider for NBN Co’s “tails”, Nextgen finally fallen to its knees after they announced order halts, price increases and encouragement to their RSP customers to migrate their customers off its “Virtual Connect” product – in essence, they are closing.

As one of the first providers to provide aggregated wholesale products to Layer 3 retail service providers, Nextgen initially gained footing as a wholesale platform for providers who wanted a mix of UNI-V products as well as data. They sold fixed quota plans to service providers who also marked up the price for a fixed profit. A pretty good deal to dive into the NBN service provider business with little overhead or risks.

As customer numbers grew, however, Nextgen struggled to scale their network to cope with the demand. No doubt the high cost of transit to the multiple NBN points of interconnect and CVC/NNI charges would have played a massive role in this. From the people I’ve spoken to, the network’s quality continued to deteriorate over the years. I suspect for most areas, they didn’t have the numbers or the capacity to purchase CVC and transit above that of the 150Mbps “CVC credit” provided by NBN Co.

However, as the market for wholesale service providers grew (especially with the rise of AAPT’s Layer 3 National Wholesale Broadband product), many Layer 3 providers began to shift to this alternate platform which gave them control over contention and network capacity. The AAPT product is a whole different ball game with the risk of contention falling right at the hands of the service provider. Also, AAPT’s recent introduction of their “NBNPhone” product meant that Layer 3 providers no longer had to rely on Nextgen to get provide UNI-V services to their customers.

What now?

Well, what now? It’s obvious that without solid customer numbers, a network provider would struggle to get into the game of wholesale service for NBN. With the investment required to get transit and CVC/NNI at each of the 121 Points of Interconnect, it’s unlikely that this will change in the near future.

While I know providers like Telstra Wholesale and Optus Wholesale all provide Layer 2 products for resellers, I don’t know if they provide the all-in-one “Layer 3” product that many start-up RSPs need in order to get started. Start-up providers rely on these Layer 3 products and simply don’t have the funds or resources to buy and set up their own co-lo equipment and their own upstream bandwidth at the IX level.

Final thoughts

With Nextgen now out of the game, this leaves AAPT and (I think) M2 Wholesale in the running to attract RSPs for Layer 3 products. Despite ACCC’s intentions, the 121 POI decision has actually led to decreased competition at the wholesale aggregation level. Oops.