Industry, market and regulatory
characteristics of the NBN rollout
The committee received evidence about market, regulatory and industry
characteristics as they relate to the efficient and cost-effective rollout of
the NBN. The first section of this chapter presents evidence received about
industry characteristics, specifically the subcontracting arrangements for the
construction of the network. Evidence about the market and regulatory
characteristics of the rollout, and particularly in relation to the pricing structures,
are discussed in the second section.
The construction of the NBN is carried out by nbn's 'Delivery Partners'
Delivery Partners may then further subcontract the construction work. The
committee received evidence on the nature of the subcontracting arrangements and
the non-payment of subcontractors, as well as concerns about the workmanship by
A number of submissions and witnesses commented on the subcontracting of
work for the construction of the NBN.
For example, in its submission, Regional Development Australia Midwest Gascoyne
(RDA MidWest Gascoyne) questioned whether the subcontracting arrangements were
delivering value for money:
We have also noted what would appear to be a wasteful
multi-layer subcontracting, which is unquestionably adding unnecessary costs to
the nbn bill for taxpayers. In some cases, we've been advised of up to six
layers of subcontracting between the worker on the street and nbn. This
practice cannot be providing value for taxpayer money?
At the public hearing in Redcliffe, Queensland, the committee heard
evidence from subcontractors, who had been subcontracted to carry out work for
another company which was, in turn, subcontracted by one of nbn's Delivery
Partners, BSA. The workers explained that they had carried out work for the
subcontractor, but had not been paid. The workers understood that BSA had paid
the subcontractor for the work. The workers sought assistance from BSA and nbn
to resolve the situation. The committee was informed that nbn had 'given no
support'. The workers indicated that they were pursuing a claim through the
Fair Work Australia Ombudsman.
The Chief Executive Officer of BSA, Mr Nicholas Yates, responded to this
...we wish to confirm that BSA has acted in accordance with our
agreement with nbn co in relation to all resourcing requirements and
subcontracting arrangements. BSA engages with a number of contractors under
Master Service Agreements (MSAs), which set out the obligations of both BSA and
our contractors in detail.
Under this model we can confirm BSA has met all its financial
obligations due and payable for the contracted works under investigation.
Furthermore, we wish to confirm and concur with the witness
statements that, while not obligated to do so, BSA met with the workers
involved, listened to their concerns and supplied them with evidence of our
financial obligations having been met in relation to the contracted works.
Committee members also pursued this matter with nbn at Budget estimates
hearings. Mr Bill Morrow, Chief Executive Officer of nbn, made the following
statement in relation to this particular case:
Again, for anybody that is working on the NBN we are very
grateful for what it is that they do and they deserve to have a fair, safe
environment that is safe for them to work and they should be compensated
appropriately for their work. We want and expect our contractors to act
ethically and morally in this regard and we have regular discussions with them
about this. If there is a situation that sounds like you described then I, too,
would be angry to hear if somebody was being mistreated. They really have a
legal recourse to take and that should be their first and foremost avenue that
they will pursue to make sure they are getting what is properly due to them.
Mr Morrow continued:
To maybe give you a little bit more comfort, we have a
standard clause in our contracts that requires the contractors to confirm
payment of subcontractors, so it does not get hidden too far down underneath
between contractors, subbie, subbie, subbie, all the way down. This was an
issue, as you probably recall from years ago, that was a serious issue and
hence, the reason we changed the contracts with language to offer some of these
subbies some protection.
Workmanship by subcontractors
A number of witnesses spoke to the committee about their concerns of the
poor quality of installation work that was being done by subcontractors. At the
hearing in Port Augusta, Mr Keith Green, Arid Land Communications, who has 38
years of experience in the communications industry, described some of the
issues that he has seen with installations of NBN infrastructure:
...you have exposed cables, you have conduit doing really weird
things, you have penetrations of asbestos and you have a cable box mounted at
chest height with the cables exposed where they can just be grabbed by anybody.
Mr Michael Schuman, Chief Information Officer at Townsville City
Council, also referred to concerns that he had about the standard of work by
That last bit of connectivity from where it hits your
premises to where it terminates at the box inside your home is all done by
subcontractors. We have had reports that the quality of those subcontractors is
shoddy...I can go to somebody else's house and see galvanised staples, where they
have taken a piece of optical fibre and stapled it to the side of the house to
get it in. Now, any time you are working with optical fibre, that is a delicate
operation; stapling is not advised in the first instance, not to mention that
it is very untidy and there are all kinds of opportunities for that to lead to
Ms Debbie Hart told the committee of the distress to her 79 year old
mother as a result of the damage caused when NBN infrastructure was installed
at a block of flats she owned:
She has a home and five units, so she is a self-funded
retiree. In May 2016, NBN commenced work at her property. In September, a NBN
agent told mum the main box had to be moved and cables had to be replaced. In
November 2016, the work was semi-completed and some cabling had been relocated.
As a result of the relocation, numerous holes were left in the brickwork. Mum
put in a formal complaint with NBN...
NBN then sent a contractor out to repair the damage. He used
silicon on the bricks to plug up the holes, which made the mess even bigger.
Red and green plugs were also put in the holes.
Ms Hart described how a representative from nbn and the subcontractor
met with her and her mother:
After inspecting the damage, all parties agreed that the
damage that was done was unacceptable and that it would be repaired to mum's
satisfaction. They then went on to explain the cabling and the box needed to be
moved yet again, which meant there would be more damage and more holes to be
Ms Hart noted that although a number of options were considered for
repair of the damage, her mother would still be required to pay for part of the
costs of the repair. Ms Hart summarised the result:
To date, the outcome of mum's association with NBN is as
follows. She has damage to her property. She is faced with paying for something
she does not want. Her health, mental and physical, has suffered. I have wasted
an untold amount of time because NBN cannot get it right and are not willing to
do what is fair and just. The job is still not finished, and NBN has now told
my mother the boxes to the individual units have been installed in the wrong
place and they will need to be moved, causing more damage.
At the public hearing in Port Augusta, Mr Green also outlined concerns
he had with the licencing of technicians, in particular that the 'quality has
The ACMA...the Australian Communications and Media Authority.
We have what are called open registration cabling licences. To get them, you do
a five-day training course, and you have to have 300 hours of appropriate
supervised training. Anybody can falsify that. I have been to the refresher
courses which we have to do on a regular basis et cetera, and a lot of the
people there have no qualifications and no experience. We know that, but they
will get the licence anyway.
In response to a question on notice, the ACMA provided information about
its cabling registration process. The ACMA regulates telecommunications
customer cabling including the registration of cabling providers (persons that
perform telecommunications customer cabling work). The ACMA advised:
The ACMA does not issue' ACMA licences' for cabling providers
nor does it directly register them. The registration process is facilitated by
five registrars who have been accredited by the ACMA. Registrars are industry
associations which issue cabling registrations and administer the registration
process on a cost recovery basis.
Prior to being registered, cablers must undertake appropriate training
at a Registered Training Organisation (RTO), complete a mandatory written test,
as well as provide evidence of having completed the required minimum hours of
practical on-the-job cabling experience. The training provided by the RTO also
requires students to undertake some practical cabling work in the classroom
Further to this, the ACMA advised:
The cabling training requirements have been endorsed by the
telecommunications industry and, in the absence of compelling evidence to the
contrary, the ACMA has accepted to date that this training is fit for purpose.
Any person successfully completing this training should have acquired the
necessary skills in order to undertake the type of cabling work required for
the cabling registration type they are seeking.
The ACMA went on to advise:
The ACMA does not have jurisdiction to regulate carrier
network telecommunications cabling, that is, telecommunications cabling on the
carrier side of the network boundary point (NBP). Requirements for cabling that
occurs on the carrier side of the NBP is specified and controlled by the
relevant individual carrier.
In the NBN environment, the NBP is the network termination
device (NTD) which is located within the end-user's premises. This means that
the Cabling Provider Rules only regulate the cabling that occurs beyond the
NTD. In practice this is the telecommunications cabling within the end-user's
In contrast, Ms Rosalie Nelson, Head of Insight for Chorus NZ, provided
the following information about the customer experience in relation to subcontractors
in New Zealand:
There has been a lot of work that has been done around the
training programs, and we can definitely see when you have had an influx of new
subs come in and then what that looks like. I do not have the detail of what we
are doing with all of the subcontractors, but the one thing that I actually
would note is that for a lot of the households the technician is something of a
hero because they come along, they front up and they explain all of this
complex stuff. So many people do not know anything about what is really
happening, and we typically find that the technician satisfaction rates, when
we ask them a number of things like were they well presented, did they
communicate, did they do what they said they would—all of those sorts of
things—are often up in the eights. They score eight out of 10, so they actually
do score pretty well.
Further, Mr Kurt Rodgers, also representing Chorus NZ, noted the work
that the company had done in relation to providing training for subcontractors:
I would like to add that, from an engineering perspective, in
my area we have active co-development programs where our engineering team
produce the deployment standards and the collateral videos and documents. We
have moved really to try to simplify, for the technology solution, all the
complexities inside it. So it has become a very low craft, sensitive job to do
the installation. We provide all this collateral and training and we regularly
work with the service company leadership teams, and we have people going out
mentoring people as well. So, while we self-contract, we are hand in hand at
the engineering level with our subcontractors to ensure that we are delivering
the collateral they need to do a simple but good-quality job.
The NBN is, among other things, an extraordinarily large and complex
construction project. It was always likely that the kinds of risks which exist
in the construction industry more widely would be present in the rollout of the
The committee understands the view put forward by nbn that
responsibility for subcontracting arrangements lies between the delivery
partner and the subcontractor. However, the evidence presented to the committee
in relation to this issue is serious and concerning. While the matter of non-payment
of contractors appears, at this stage, to be uncommon, the evidence in relation
to the poor workmanship of subcontractors was widespread.
The committee believes it is particularly invidious for low-quality
workmanship and unfair contracting arrangements to occur within a project that
is, in effect, funded, managed, and supervised by the Commonwealth.
The committee has been unable to discern any particular systems that
were in place on a project of this scale to ensure that workmanship would be
carried out to an acceptable standard, and that subcontracting arrangements
would be fair and effective
The committee intends to pursue this matter through the next year of the
The committee requests that nbn review and provide advice to the
committee on its processes and conduct with regard to the engagement, training,
coordination and dispute resolution with subcontractors, in accordance with
Market and regulatory characteristics
As outlined in the Corporate Plan 2017:
...nbn has been structured as a wholesale-only, open-access
broadband network available on equivalent terms to all access seekers. This is
intended to level the playing field in Australian telecommunications, creating
real and vibrant competition within the industry.
The committee heard evidence that the establishment of nbn as a
wholesaler and the regulatory framework which sets out the pricing structure
for NBN services for RSPs is impacting on the operation of the network and
impeding the take up of higher speed plans.
NBN pricing structure
On its website, nbn lists a number of objectives that underpin pricing
of their products including: to deliver a wholesale service that will provide
an appropriate return to Government, maintaining uniform national wholesale
access pricing, fostering competition, innovation and flexibility in the market.
nbn sells wholesale access to its network to RSPs who then sell internet
and phone services to customers.
There are two prices charged by nbn to RSPs to access the network: the
Access Virtual Circuit (AVC) and the Connectivity Virtual Circuit (CVC).
The AVC is a fixed monthly fee for each RSP end-user. The AVC charge is
determined by the maximum bit rate requested by the RSP. Currently, the most
common bit rate requested is 25Mbps down and 5Mbps up and costs the RSP
The CVC charge paid by the RSP depends on the capacity that the RSP
wants to flow between the RSP's network and the nbn's network at the point that
the two networks connect (the Point of Interconnection). One description often
used when explaining the amount of CVC purchased by RSPs is the 'thickness of
the pipe that determines the maximum amount of water flowing through'.
The maximum prices that nbn can charge RSPs for AVC and CVC are regulated
under a Special Access Undertaking (SAU). The SAU is assessed and approved by
the ACCC. The current SAU was approved by the ACCC in 2013.
In accordance with Part XIC of the Competition and Consumer Act 2010,
the ACCC is required to assess the SAU against a number of principles. Fundamentally,
customers should not be worse off when migrating to the NBN from legacy copper
and HFC networks.
At the public hearing in Melbourne, Mr Michael Cosgrave, Executive
General Manager, Infrastructure Regulation Division, ACCC, explained that a key
driver of the AVC-CVC construct was to ensure that 'consumers not be subject to
Specifically, 'prices for entry level NBN services should be broadly comparable
to functionally equivalent legacy services'. 
Another consideration for the ACCC to assess the AVC and CVC charges
relates to the capacity for nbn to generate revenue:
The ACCC also considers that NBN Co has incentives to price
its products to encourage uptake of higher value services and increase revenue.
End-users who value higher value services that cannot be provided by legacy
infrastructure are likely to pay higher prices for those services.
How does CVC affect the customer
In a position paper published on 1 August 2017, Mr Morrow explained the
CVC charge in more detail, noting that the practical impact of RSPs not
purchasing enough CVC is constraints to the speed available to customers during
While the amount of CVC purchased limits the total volume of
data being passed between the two networks, the more practical impact of not
purchasing enough will constrain the observed speed during busy traffic times.
In a situation where more customers are added to an RSP's network, or
the average speed or consumption changes, without an increase in CVC capacity,
service quality will be affected.
As more end-users are added, or as the average speed and
consumption increases, the network carrier will need to spend more money to add
capacity OR accept the speed offered to the enduser will degrade during the
busy period of the day. This trade-off has existed since the industry was
established and is not specific to nbn's or the RSPs' networks...If RSPs don't
dimension their own network with enough capacity, if they don't purchase enough
CVC flow through at peak time, or if nbn has not dimensioned its network with
enough capacity, service will degrade at peak time.
At the public hearing in Sydney, Mr Morrow argued that, because there is
so much competition in the market, from both incumbent RSPs as well as new
entrants to the market who are all selling essentially the same service, RSPs
must compete aggressively on price if they are going to increase market share.
This situation means that RSPs are being forced to cut costs:
When you have that kind of price competitiveness in the
market, there is no choice if you want market share—meaning a higher percentage
of customers from the homes that we open up in an RFS area—but to continue down
this path of price competition. That squeezes their margins, because the
consumers, at the same time, are increasing their usage over time, which means
it costs more for networks to be built, and cost recovery is required there.
When you have this margin squeeze that occurs, they're left with either cutting
their labour costs, cutting their building costs, cutting their advertising
expenses or cutting the CVC expense, which they can actually manipulate with
NBN and control on a day-to-day basis.
Mr Morrow explained that despite a 25 per cent reduction in the CVC
charge over the last two years, RSPs are still under pressure because of the
Every one of these retailers understands our pricing
structure, and we have had a massive reduction in the price over the last
couple of years, from a [CVC] price of $20 per unit to an average of about
$14.50—a reduction of more than 25 per cent over that period of time—but they
are under greater pressure because of this phenomenon associated with an
overheated, over competitive market.
Mr Morrow was of the view that the over-competitive market is becoming
destructive. Further to this, Mr Morrow explained that the CVC price reduction
may result in some of the smaller RSPs leaving the market:
Because, quite frankly, the price reduction will force the
little guys that can't make the money and don't have the scale and lower cost
structure out. They won't make any money and will have to leave the market, so
that 100 [current RSPs] shrinks down to a reasonable level. Similarly, if it
goes down to one or two, the profit margins get big, and that attracts other
people to come in, and that's why that equilibrium occurs.
Mr Morrow explained that some of these issues will balance out once the
rollout is complete:
There is a market dynamic, a free-market issue, that I will
elaborate on... With this price war phenomena and the 100,000 new homes of
inventory every week, with 100 providers that can resell this service, with
this need for market share because of the economy of scale and business, you've
got this very unique phenomenon that says: 'I've just got to run and I've got
to offer the most competitive price, because that's what's going to pull me on
board. I'll think about whether they're on the right plan later.' That is in
some cases. Once we stop introducing 100,000 new homes of inventory every week
and we balance out and are near at the end of the rollout, you are going to
say, 'All right, fine. Two things are going to happen. One is that there is not
much new inventory, and now I just want to go after my competitors' customers
and see if I can't pull them over to me. Now I've got to differentiate in
different ways, with perhaps more quality.' Can we wait until 2019 or 2020 for
this to start to ramp down for that to occur? I don't think so, and I don't
think we have to.
In terms of consumers being willing to pay higher prices, Mr Morrow,
We have conducted our own research. We have third-party
companies that specialise in this area to be able to advise us as to what
consumers would be willing to pay. No-one wants to pay more than they have to,
so that's just normal consumer behaviour, but the fact is that, if consumers
knew what they were getting and the options available to them, we see a propensity
that they would be willing to pay more.
Mr Morrow emphasised that customers are willing to pay for quality,
especially if they have a good understanding of the service being offered:
... people are willing to pay for quality, and if you explain
that quality to them they will come on board and buy this service. But it is
difficult in a competitively intense environment like what we have right now.
Mr Morrow provided examples of RSPs who are now providing more
information to customers about the speeds that may be available at different
times of the day.
...there are a couple of RSPs out there...that have recently
changed their comms [communications] plans and are now talking ranges with
their consumers. That's exactly the conversation that needs to happen because,
in some way, we—and I'm going to say NBN Co is at fault here too—have put out
this view that you can buy 25, 50 or 100 megabits per second without saying,
'That's a peak information rate, not a guaranteed 24-hour-a-day,
every-minute-of-the-day rate that you're going to be observing.' Hence the
reason why these retailers...are starting to change that conversation out there
and saying: 'It will range. You'll peak at 25 megabits per second, but you may
drop down to 15 megabits per second or maybe to 10 megabits per second. Is that
good enough for you at this price point? If not, maybe I have an upgraded
product where I can give you more certainty—call it the bottom end of my speed
delivery—that that will be increased because you're going to pay $5 more a
month, $10 more a month or whatever it is I have on offer'.'
On the question of whether the market will respond by itself or will
action by the ACCC be required, Mr Morrow stated:
I think it is multi-tier. First of all, I think our [RSPs]
are realising that this is creating more of a problem than just getting the
market share, so they want to do more. You see TPG saying, 'I'm going to start
talking about range'; [of speed on a plan] you see Aussie Broadband saying,
'I've have provisioned a massive amount of CVC because I want your busy hour of
the day to have this minimum service level.' You're seeing Telstra and Optus
start to think about this as well. By doing so, the market may actually respond
on its own. When you hear the ACCC saying, 'I want to put some speed monitoring
devices out there', that catches a lot of people's attention as to whether or
not they need to be clear in how they're advertising this product and,
therefore, clear in the options that they give to the consumers.
Stakeholder views on the NBN
The majority of the evidence received about pricing related to the CVC,
with particular reference to the amount charged for CVC and the impact this is
having on competition and the customer experience.
In their submission, Macquarie Telecom Group (Macquarie Telecom) expressed
concern that there is not an effective wholesale market for NBN services. The wholesale
challenges are exacerbated by the CVC pricing model:
It is not until an RSP has a significant number of connections
that it can economically purchase CVC in that area and directly connect to the
PoI. Through this period of attaining scale, the RSP is reliant on a wholesale
aggregation service which, in turn, makes customer acquisition highly
problematic and uneconomical.
The Queensland Government is concerned that increases in the wholesale
charges to retail service providers are increasing costs to consumers and
business without a commensurate increase in service performance.
In its submission, Vodafone Hutchison Australia (Vodafone), stated:
NBN's wholesale pricing arrangements discourage RSPs from
offering their customers the faster speeds that the NBN is capable of
delivering...The amount of CVC an RSP purchases is one of the most significant influences
on the quality of the service experienced by that RSP's customers. The current structure
of this CVC pricing penalises RSPs for provisioning higher guaranteed capacity
and therefore more consistent guaranteed performance for their customers.
The fixed AVC monthly charge increases steeply for higher
speed plans. This, combined with higher CVCs to guarantee the higher throughput
customers would expect on higher speed plans, means that the pricing model
discourages RSPs from offering higher speed data plans.
At the public hearing in Sydney, Mr Dan Lloyd, Chief Strategy Officer
and Corporate Affairs Director, Vodafone spoke about the CVC charge in more
We fully understand NBN's need to deliver a rate of return to
government, and we've put forward in NBN's current consultation on the CVC what
we think is a very practical way forward, which is to substantially reduce the
CVC—we have proposed halving the CVC rates—but to balance that with an increase
in the AVC so that NBN still gets the wholesale revenue that it needs. It said
$44 a month, currently, rising to $52 a month in 2020. We believe that can be
achieved through a model that has a higher fixed access charge and a lower
variable component, so RSPs aren't facing such a massive risk in buying more capacity
at the most congested times of the network.
Mr Lloyd explained that there is a fear amongst RSPs about purchasing
more CVC. Part of this fear relates to the difficulty to communicate to
consumers, in an environment where there is a high number of RSPs selling the
same product, that an increase in cost is due to a higher quality
Mr Lloyd went on to suggest that a readjustment of the pricing model is
required to 'maximise the potential of nbn to provide higher and higher
If we look at New Zealand, for example, which has a fixed
monthly charge—and so it's entirely AVC, to use that terminology—we see in
areas where fibre is available people are overwhelmingly—about 80 per cent of
people—purchasing 100 megabits per second, whereas with NBN 80 per cent of
customers are on 25, five or below. We think there is some evidence that that a
more stable charging model that doesn't bring that fear of purchasing more
capacity is the best way for the industry to move forward.
Changes to pricing announced in
On 17 February 2017, nbn announced that it would change CVC pricing to a
'new discount model', which would take effect from 1 June 2017:
The new model...calculates the discount based on individual
retailer averages, as opposed to an industry average. It automatically reduces
the price of CVC as the average amount of CVC per end user increases.
nbn explained that the new model will 'further enhance RSPs ability to
manage service quality provided to their end users':
This model enables RSPs, both small and large, to have
greater control over their service experience and the cost related to that
experience. It's up to each individual RSP to make a judgement call on how much
CVC at a Point of Interconnect it should buy to service its users in that area.
Under the industry average model retailers had been paying $15.25/Mbps
per CVC unit but under the new model they will be able to achieve discounts
based on how much CVC they purchase per end-user. According to nbn:
The new model enables retailers to differentiate their
offerings to consumers, which will help promote competition and a wider choice
of broadband plans.
As noted earlier there has been a reduction in the CVC charge over time
from $20 in June 2015 to the current average of $14.40Mbps per end user. Mr
Morrow explained the reductions to the CVC charge in more detail:
It's entirely up to each of the nation's 45 RSPs as to how
much of that bandwidth they choose to allocate among their end-users. With the
recently introduced pricing scheme, the more CVC the RSP allocates per end user
the more their price/unit decreases and can go as low as $8/Mbps.
nbn has reported that between February, when the new discounting model
was first announced, and June, there was an 11 per cent increase in CVC
purchased per end user on average on the network.
Ms Caroline Lovell, Chief Regulatory Officer, nbn explained that there
is scope within the current SAU for nbn to 'rebalance' the AVC and CVC pricing
depending on the 'nature of the rebalance'. The price changes announced in
February 2017 have been implemented within the scope of the existing SAU.
Broader changes would require nbn to submit a variation to the SAU to the ACCC
for assessment under the statutory framework.
In relation to the changes to the CVC charge announced in February 2017,
Vodafone submitted that whilst the changes did represent some improvement to
CVC pricing, further consideration should be given to other charging models:
NBN Co. has recently announced some improvements to its CVC
pricing which give RSPs some discount if that RSP purchases more CVC capacity
and therefore guaranteed minimum performance per customer. However, the
discount is relatively modest and is unlikely to provide a substantial
incentive to migrate customers to the higher speed plans. As NBN Co. acknowledges
there needs to be further consideration of either more substantial discounts or
even a move to different charging models.
At the public hearing in Sydney, Mr Morrow told the committee that the
company is constantly reviewing the pricing structure in consultation with
There is a perpetual one; it is always underway; we are
always looking at new ways to do this. When this management took over a bit
over three years ago, the price was set at $20; it was fixed; there was no
dimension, no scaling. We introduced a dimension based structure; that was an
industry wide average. Subsequently we introduced a regional 'by RSP' dimension
based structure. These things go through a very well spelled out agreed process
and have a long cycle time. Even though it was only on 1 June that we had the
newest pricing regime put in place, we immediately began talking about what
else we should be thinking about. So that has been underway since then.
Potential impact of further pricing
nbn's Corporate Plan 2017 forecasts a base case peak funding of
$49 billion (within a forecasted range of $46 billion to $54 billion) with an
expected internal rate of return (IRR) of between 3.2 per cent and 3.7 per
The committee sought information from nbn about when information about
the potential impact of pricing changes on the IRR, peaking funding and forward
projections would be available, in the event that changes are made to the nbn
pricing structure after the Corporate Plan 2018 is published. Mr Morrow
confirmed that these sorts of updates would be provided in the Corporate
Plan the following year.
The committee recognises the importance of prices being set by nbn to
generate revenue, and encourage competition in the market, and notes the
evidence from nbn that they undertake pricing reviews on a perpetual basis to
ensure that the pricing structure is appropriate.
The committee notes the different approach taken by Chorus NZ which
applies a flat access charge, and where 90 per cent of new customers are taking
100 Mbps plans with unlimited data, and there are more 13,500 premises with
The committee notes the concerns raised by witnesses and submitters
about the wholesale market and in particular the CVC. The pricing changes
implemented in June 2017 are already showing positive results with an 11 per
cent increase in CVC purchased per end-user on average on the network between
February and June 2017.
The committee notes that analysis and discussion about the nbn pricing
structure will be ongoing, and believes it is one of the key topics that should
be considered closely in the next annual report, along with careful
consideration of the nbn business model as a whole.
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