NBN Pricing Explained
NBNCo released wholesale pricing guidelines in December 2010. The pricing has multiple components, including the wholesale price to connect an individual subscriber. This connection price starts at $24 per month, the figure was widely reported. However the other pricing components were not widely discussed. This report outlines the NBNCo pricing model, showing how these additional components affect the total wholesale price for NBN services.
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Background
NBNCo sells wholesale services only. These are purchased by “Access Seekers”, who then offer retail services to individual subscribers. A key NBN feature is uniform wholesale pricing for all Access Seekers, to foster a competitive retail broadband market. In particular, NBNCo provides no discounts for volume, all Access Seekers (and hence retailers) pay the same rate for wholesale NBN services.
Pricing Components
This report outlines pricing for “standard” broadband service components, prices for Committed Information Rate services (i.e. bandwidth guarantees) and multicast (e.g. for Pay TV) are not considered.
Each subscriber needs an “Access Virtual Circuit” (AVC), which identifies their traffic within the NBN. Access Seekers generally purchase one AVC per subscriber, the AVC is the first component of the wholesale cost.
The NBN comprises multiple “Connectivity Serving Areas” (CSAs), each with a maximum of 78000 subscribers. Access Seekers purchase a “Connectivity Virtual Circuit” (CVC) for each Connectivity Serving Area they wish to cover. The CVC is essentially a bandwidth pipe, the size determined by the cost. The larger the CVC, the better the service to subscribers within the Connectivity Serving Area.
The Connectivity Virtual Circuit is the second component of the NBNCO wholesale cost.
The NBN is essentially an Access Network, terminating in subscriber premises and (eventually) replacing the existing copper access network. Access Seekers connect to the NBN at a specified Point of Interconnect (POI), there will be 121 of these.
There is a per month charge for every POI connection, the third NBNCo wholesale cost component.
Finally, there is a one off charge for each POI connection, the fourth NBNCo cost component.