It is not generally appreciated that the nbn™ has never claimed that CVC is backhaul. It says it is only a pricing construct. This is a follow-up to last week’s column ((the Blame Game – Cutting teh Gordina Knot) explaining how CVCs introduces congestion when it does not have to. There is a better way to charge for usage that will unleash the economic potential of the NBN. See Economuse 2017-8-10
Letter to the Editor in response to Bill Morrow’s comments on CVCs and market behaviour.
Who is to blame for poor speed and poor performance on the NBN? The pricing of the NBN is certainly knotted. It is more complex than it needs to be and that complexity leads to the current arguments about speed and performance.
VHA’s public submission to the nbn seems to have influenced its CEO, Bill Morrow, in his announcement that he will be looking to revise pricing to “have a minimum assurance of a certain quality of product”. But, VHA’s proposed rebalancing of NBN pricing would some matters worse.
There is a simpler pricing regime that will improve both speed and performance and remove the blame from the nbn.
The two major problems with the National Broadband Network business model are the pricing structure and the future level of prices.
In November 2016, the nbn conducted its third secret consultation on CVCs; a controversial aspect of its pricing structure. It is still fiddling with a hopeless construct. The pricing structure is too complex, does not lead to affordable retail prices and will not lead to the transformational outcomes expected from this broadband project.
Worse, the nbn clings to the hope that it can turn a profit on a very expensive project which was priced initially to smooth migration from legacy copper networks. This will mean increasing wholesale revenues per line (ARPU) over time; which has not been the case historically for broadband ARPU.
For more on the latest consultation, read economuse-2016-11-30
The Ministry of Business Innovation and employment NZ is moving to the building block method (BBM) adopted by the ACCC some years ago.There are several ultra-fast broadband providers in NZ and one of them also has a copper network with no decommissioning deadline. The Ministry is seeking views on how this wholesale sector should be regulated from 2020.
My submission suggests that the BBM is just one step towards the utility style regulation that it wants. NZ has the opportunity to also adopt utility style wholesale pricing which addresses its concerns about anchor products, encourages adoption and use of broadband networks while avoiding the mistakes made by Canada and Australia.
The submission can be accessed here: NZ-2016