NBN 1Gbps services would cost AU$400 due to 'unfair' CVC: MyRepublic

MyRepublic has said that retail service providers (RSPs) cannot offer gigabit-speed services on Australia's National Broadband Network (NBN) for anything less than AU$300 thanks to the connectivity virtual circuit (CVC) charge.

The comments came in response to NBN CEO Bill Morrow's claims last month that consumers don't need and wouldn't use 1Gbps broadband, as evidenced by the fact that no RSPs have taken up NBN's offer to provide gigabit-speed services to consumers, with most end users on the 25/5Mbps speed tier.

But according to MyRepublic Australia managing director Nicholas Demos, the only reason RSPs are not offering a 1Gbps is thanks to NBN's CVC and access virtual circuit (AVC) charges.

"Bill came out and said 'people don't want it because we have a product now and no one's taking it'. That's because it's not at a fair price," Demos told ZDNet.

"AVC for a 100[Mbps] product now costs AU$38 for a wholesaler, for me to get on to buy, but then I have to pay CVC on top of that.

"For a gig product, I've got to pay AU$150 today, and then I've got to pay CVC on top of that, and then of course all my other phone costs. So the price to launch a gig product today in Australia -- I'd have to price it at between AU$300 and AU$400, which is not a fair price for a consumer to pay."

NBN's wholesale pricing incorporates a two-part model, with the CVC charge paid in addition to the AVC charge levied across all speed tiers. The CVC charge reserves a consumer's bandwidth from the point of interconnect (POI).

By comparison, Demos said New Zealand only has an AVC and no separate CVC charge, meaning RSPs can provide consumers with 1Gbps services for just NZ$64.99 -- although MyRepublic's 1Gbps service in New Zealand will be priced at NZ$129.99 after six months -- as demonstrated by the fact that the majority of RSPs in New Zealand have been offering 1Gbps services as of the end of last year across the New Zealand government's NBN equivalent.

Morrow, who later defended his statements, last month said "there is still minimal consumer demand for these ultra-fast speeds, especially at the prices retailers would have to charge for them".

Demos, however, argued that while Morrow was partially correct in that consumers do need these high speeds all the time, they do need them overall.

"Bill Morrow tried to defend Australians not wanting gig speeds and all that, but we want to show that people will use it. In that article he wrote, he's a little bit right that people don't need a gig speeds every moment of the day ... but for me it's like gas and electricity; when you need it, it needs to work," he told ZDNet.

"If everyone's using [a service] all at the same time, it's not going to work how you want it to work. And that's what this whole gig speed is about: It's not about using it every second of the day, it's when I turn on the water, it needs to run.

"It's just such a silly argument that [because] 82 percent of people have taken a speed of 25 or less it means that we don't want fast internet. That's just ludicrous. I call it highway robbery."

MyRepublic, which also provides broadband services in New Zealand and Singapore, is ploughing forward with its plans to prove the desire of consumers for a 1Gbps broadband service by launching a "gigatown" in Australia.

MyRepublic said it has received feedback from 6,000 customers since announcing the gigatown concept last month, showing there is significant interest in the concept.

The formal process for people to nominate their town opens this week, with the successful entrant to be announced and 1Gbps services launched simultaneously in July. The person responsible for entering the winning town in the competition will be given free 1Gbps broadband services for a year, as well as a Sony pack worth AU$5,000 that includes a 4KTV and virtual reality (VR) system "just to show what people can do if they've got all the right bandwidth at their house", Demos said.

Other MyRepublic customers living in the gigatown will be provided with a 1Gbps service for AU$60 per month for a year, and customers in every other area in that region will be offered the service at a "fair price".

Demos said it's not just about providing fast fibre services for consumers, with MyRepublic looking to hook up small businesses within its gigatown to show that they were able to expand their business with the help of faster internet.

"We also want to try and prove that it's all for small business as well," Demos told ZDNet.

"It's not just consumers; it's for small business, and that's a key here. Larger organisations can get access to fibre and big organisations can get fast speeds, but small businesses can't. And that's what it's about."

MyRepublic last month called "bull****" on Morrow's claims, saying that 82 percent of NBN's users are only on speeds of 25Mbps or less because the incumbent RSPs have simply moved customers from their existing plans and price points onto the same plans and pricing on NBN services.

"1Gbps speeds are simply way beyond what even the most advanced end user needs today, let alone what is needed by regular families across Australia," Morrow said in February.

"There is literally not a single mass market consumer application -- or even a combination of applications -- that requires 1Gbps capability right now.

"Even if we offered it for free, we see the evidence around the world that they wouldn't use it anyway," Morrow said during NBN's financial results presentation.

Meanwhile, Telstra and Optus have both launched 1Gbps 4G mobile networks; the City of Adelaide in January put out a call for providers for its 10Gbps fibre broadband network; and in Singapore, 10Gbps broadband services have been offered by both Singtel and M1 for a year.