Telco providers are asking NBN Co to extend the bandwidth boost, which has allowed them to cope with the surge in consumer traffic during the pandemic, warning that service quality could suffer once the extra capacity is removed.
NBN Co provided 40 per cent more bandwidth to telcos free of charge in early March to help them adapt to large surges in consumer usage caused by the coronavirus pandemic.
The offer has been extended until August 19, but Telstra, TPG Telecom, Optus Singtel, Vocus Group and Aussie Broadband want an extension or long-term solution to avoid reduced quality in services or price increases for their customers.
"In March, NBN Co stepped up ahead of the anticipated surge in customer demand to lift network capacity," Optus' vice president of regulatory and public affairs Andrew Sheridan said. "Demand hasn’t abated so we need to maintain current capacity so we can continue to meet customer’s needs."
The connectivity virtual circuit (CVC) charge, which covers the amount of bandwidth telcos can make available to customers, is part of the wholesale prices telcos pay to the NBN. The amount of CVC a telco buys affects the internet speed, particularly at peak usage times from 7pm to 11pm. But pricing has been a consistent source of tension between NBN Co and telcos, who have viewed the charge as too expensive and a barrier to buying adequate bandwidth.
"Given many people will continue to work and study from home for the foreseeable future, we think it makes sense to extend the 40 percent free allocation of CVCs for the locked down geographies for the time being or, as we and others in the industry have called for previously, for NBN Co to look at removing the CVC pricing structure altogether," a Telstra spokesman said.
NBN Co has written to the telco providers informing them that they would have an update on the offer next week. A spokeswoman said NBN Co is in consultations with the industry on ways to manage the issue.
"We are continuing to monitor demand on the network as well as the evolving situation with respect to COVID-19 and expect to provide an update to industry in the days ahead," she said.
But Aussie Broadband managing director Phil Britt said that even with an extension, the pricing model does not work. "Either prices go up, service quality goes down or the wholesale model changes," Mr Britt said. "The extension is certainly welcome, but companies like ours rely on long-term certainty."
Mr Britt said that if his business increases prices, some customers - about 10 per cent - will choose an alternative provider. He said provide a common access price was the best solution, allowing NBN to keep its revenue and the telco providers to keep on customer experience as opposed to internet performance.
Dodo and iPrimus chief executive Antony De Jong said his businesses would welcome an extension on the offer, but that the charge should be abolished.
“NBN’s consumption-based pricing model is incompatible with market reality, where consumers expect unlimited data at flat monthly rates," Mr De Jong said.
A TPG Telecom spokeswoman said the business had seen significant increased in usage during COVID-19 and that long-term changes in customer behaviour were likely.
"The telco industry has shown that it can come together to protect customers in difficult times and we look forward to NBN’s proposals to ensure that we can all continue to do so," she said.
Zoe Samios is a media and telecommunications reporter at The Sydney Morning Herald and The Age.