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Vodafone Calls For NBN Pricing “Makeover”

Vodafone Australia is calling for a major makeover of the wholesale prices charged by the NBN Co as the “current model is making telcos opt against selling faster broadband plans to consumers”.

According to The Australian, Vodafone believes “the ongoing increase in wholesale prices is unsustainable and will inevitably push telcos to offer broadband over 4G and 5G tech”.

The report states that the costs of providing NBN services has risen 60% since 2010 due to the NBN Co’s connectivity virtual circuit (CVC) charges, which is the price paid by telcos to move data from the NBN to its own networks.

The amount of CVC bought directly affects the internet speeds that a telco can deliver to consumers, so telcos have been managing the costs by offering slower NBN plans.

Vodafone Australia’s head of broadband services Matthew Lobb told The Australian that the NBN Co has become too reliant on CVC revenue to fill its coffers, which needs to change.

“It’s a usage charge and a fee rolled into one and forces retail service providers to dimension their plans in a way that ends up affecting the service received by homes,” Lobb warns.

“It sounds technical, but CVC is completely a commercial construct created by NBN Co, and as wholesale costs keep rising, broadband services will have to be provided using 4G/5G technology.”

Vodafone said the high cost is causing telcos to move away from providing higher speed NBN services.

“This in large part is due to the industry concern that higher speeds result in more data usage and therefore uneconomic costs for service providers,” Vodafone said in a submission to The Australian.

“We understand that NBN Co needs to make a return on its investment, but the industry cannot continue to operate under a pricing regime that results in rising costs and a disincentive to sell faster broadband to consumers.”

The NBN Co is said to be open to lowering its wholesale prices and is currently in discussion with telcos to determine pricing.

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