Internet

CVC Fees And The Pricing Dynamics Behind Australia’s Internet Speed Issues

Australia’s nationwide broadband architecture, the NBN, was created to make high-speed internet readily available anywhere in the country. In practice, however, things have proven a little different.

Many end-users, including business owners, have ended up frustrated by the fact that often a given RSP (Retail Service Provider)’s NBN plan fails to offer the transfer speed the customer is paying for. Whether retail providers or NBN Co are to blame has been up for much debate.

One of the main causes of the problem is CVC fees.

Australia NBN

CVC And AVC Explained

 The NBN system has two levels: one is the NBN itself, the other the retail providers. These providers buy their bandwidth wholesale from the company, and the monthly CVC (Connectivity Virtual Circuit) charge is what they pay for it. In short, the higher the CVC price paid by the RSP, the more bandwidth they are allowed to access and resell.

AVC (Access Virtual Circuit) is what the end-user pays for the bandwidth offered by the RSP.

Very often the speeds covered by the AVC cannot be realistically provided if the overall demand on the RSPs network exceeds the bandwidth limit of their paid CVC.

The main catch here is that the CVC charge paid by an RSP is not public. The dynamics of all this are explained thoroughly in this cnet article.

In the past, according to the same source, the NBN Co has blamed RSPs for being stingy on how much CVC they buy, and thus ultimately dishonest to their customers. The RSPs have responded by accusing NBN of keeping the CVC prices for top-speed internet absurdly high.

Proposed Solutions And Their Implementation

In recent years some NBN providers have called for a complete replacement of the CVC-AVC model, while NBN explained that CVC fees are needed to recover the costs of having built the network’s infrastructure.

Things look good in perspective: With the growth of the network CVC costs have kept dropping, and since early 2017, NBN has adopted a pricing model that offers increasing discounts on CVC prices to retailers based on how much bandwidth their customers actually purchase.

With 1Gbps end-user plans having long since become available and being in demand, and with natural market dynamics helping lower these prices anyway, NBN will most likely calibrate their CVC charges accordingly.

There is no official confirmation of any intention on the part of NBN Co to remove the CVC system, but they have begun and will continue to make it much friendlier to quality-oriented RSPs and ultimately to the end-user.

Some Practical Tips

To conclude, it’s clear that these CVC-based speed issues will soon be solved without much conflict.

Still, if your RSP is currently not providing what you’re paying them for and you suspect that they’re underpaying their CVC fees, here are some basic, end-user level measures you can and probably should take to verify and maybe fix that.

All in all, we hope the information presented here has been helpful, and if you’re currently looking for NBN providers and plans to choose from, that we helped you choose well.

About the author

Robyn Matthews

Robyn Matthews started writing about technology when she was far too young and hasn't stopped. She spends most of his time obsessing over computer software and hardware, and loves talking about herself in third person.

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