The NBN Cost vs Quality debate.

nbn-costEvery NBN users wants the speed and reliability promised by the NBN in the huge amount of advertising that is currently underway across Australia as NBN becomes available to Aussies. Unfortunately the blistering speeds are not being seen by users who have connected to NBN.

As with other products in the market, you can’t get the best at the cheapest price. And this is apparent with NBN. Even more so with the way that NBN charge are access to bandwidth on the network. NBN charge a per Mb price for Mbps bandwidth speed across their network. This means that ISPs must buy enough bandwidth that their customers are happy and achieve a usable service speed.

With this comes some dissatisfaction as consumers are reading the Up to 25/5Mbps speed claims for plans offered by ISPs. When they get home and run a speed test and don’t see close to 25Mbps download speed they become dissatisfied.

ISPs are stuck in the middle of trying to provide an affordable, competitive service while still providing a service with good speeds. At the time of writing bandwidth on the NBN network is priced at $15.70 / Mb. This means for a 100Mbps service with guaranteed speeds it’s going to cost the ISP $1,570 per month! This doesn’t include costs of running the network, costs of managing a customer, costs of accepting payment, sending bills and acquiring the customer in the first place.

As you can see these numbers don’t make for an attractive business case for an ISP providing 100Mbps speeds over the NBN network. Instead ISPs are force to contend networks so that affordable services can be provided to consumers. Contending a network is the term used for users sharing bandwidth on the network. This means that the ISP buys a certain amount of bandwidth from the NBN and allows users to share this. Depending on how much is purchased and how many users are on the network will result in possible congestion on the network during peak times.

This is a clear frustration for NBN users and ISPs. NBN users don’t want to see streaming services buffering and ISPs don’t want to be flooded with speed complaints.

What is needed are changes to the way that NBN charge for bandwidth on their network. Do away with the CVC bandwidth charges and change the model entirely. Customers want to lightning fast speeds that the NBN promise.

There are also calls for the government to write off the cost of the NBN build as a public expense. This would mean that the NBN Co could restructure the costs of accessing the network and not be so concerned with making back the $50+ billion that is being spent building the network.

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