NBN Co pricing under spotlight

Eliminate the AVC charge

The "Tragedy of the Commons" means that restrictions on network traffic need to be imposed for the pricing to be reasonable.

Abolishing the AVC charge means that people pay only for the data that they use, which is the same model used for other utilities (power, water, etc.). Giving everyone the fastest speed possible will encourage innovation in a way that Labor's NBN failed completely, because people will be able to experience the benefits of FTTP (if only for a limited time).

If you only have a 12Mbps connection on fibre (which in April 2013 was 47% and rising) then the connection is slower than FTTN, 4G, HFC and almost half of ADSL2+ connection which means people aren't able to experience a difference (e.g. HD video conferencing). If you have a 1Gbps connection with 5GB of data you can test the HD video conferencing and if you start to run out of quota move up to the next plan.

NBNCo need to make a fixed amount of money to cover the build costs and maintenance. The costs of sending more data is significantly less than the extra revenue generated, meaning that as average data downloaded per user increases, prices of CVC will fall. If people have faster connections, they will download more data simply because they aren't waiting around. This creates a positive feedback loop: more data is downloaded so it becomes cheaper, quotas rise so people download more.

Pricing purely on CVC also creates positive feedback for NBNCo to upgrade their internal network infrastructure because fixing congestion issues will enable people to download more data increasing revenue significantly more than the cost of the fix.

Currently I can purchase a 30 day unlimited calls plan for $39.95 with 4GB of data. In a 4G area the performance could be close to 12Mbps speeds. For a light user that could easily be more than enough. If extra data is needed a 4G data pack is $29.95, which is less than the cheapest NBNCo plan. However if the speed difference is 4G versus 1Gbps then there is more incentive to connect. Reducing the base connection charge will encourage more people to connect and once connected people are likely to start using the network more.

Sure the heavy downloaders will whine, but with more people connecting on faster plans, CVC prices will start to fall rapidly. Labor's biggest mistake was AVC pricing because it enabled the Liberals to claim that FTTN would be adequate for most people and those who needed a faster connection should pay for it themselves.

Where is percentile pricing?

And yet they haven't allowed the option of 95 percentile pricing like most ISPs around the world use?