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Price Put On NBN Capacity Problems

A new report by The Australian has claimed that the speed-issues facing the national broadband network could be solved by telcos for as little as $9.75 per user per month.

Journalist Anthony Klan says “telcos are refusing to buy more capacity, instead opting to aggressively lobby NBN Co to further drop bandwidth charges.”

Klan’s comments come a week after NBN Co CEO Bill Morrow launched a similar attack on telcos, blaming a price war among ISPs as the root cause of the NBN’s problems.

Speaking on Sky News’ Business programme last week, Morrow argued the reason NBN connections were slow at peak times was because telcos were competing heavily on price and so purchasing low amounts of CVC.

CVC – connectivity virtual­ circuit – is a bandwidth fee charged by the NBN to telcos. The more CVC telcos purchase, the greater amount of data they can service.

However, the opposite is also true. An insufficient amount of CVC to handle outgoing data packets can result in bottlenecks and the slower NBN speeds some have reported during peak use periods.

Originally, NBN Co priced 1Mbps of CVC at just $21 per user per month. It has since been cut to $14.25.

In comparisons, NBN Co offers 2Mbps for $20.50 and 3Mbps for $24.

Experts speaking to The Australian claim that the price war between telcos has seen both Optus and Telstra – who account for 60% of all NBN connections – purchasing close to the industry average of 1Mbps per user per month.

What this means if that if every NBN connection were to access the network at the same time they would each achieve speeds of 1Mbps.

Therefore, Khan argues, it would only cost telcos an additional $9.75 per user per month to triple their NBN bandwidth supply and address the issue.

Unfortunately, telcos are proving unsurprisingly resistant to this possibility.

Purchasing more CVC would be an easy fix for a widespread problem but it’d have to come at either a cost to them or the customer. Either route would cost them, so there’s little incentive to break away from the current status quo.

At least, until regulators like the ACCC get serious about holding telcos to account about the speeds they promise customers.

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