Damian Ivereigh, the chief executive of Launceston-based Launtel, said in a blog post that connectivity virtual circuit or CVC was the bandwidth that retail service providers purchased from the NBN Co. The RSPs had initially minimised the amount of CVC they bought, due to the cost involved.

Then the NBN Co started offering bundled solutions, with enough CVC at a reasonable discount. Last year there was the Focus on 50 campaign to increase the take-up of 50Mbps packages and then this year there is a campaign to push 100Mbps plans (though there is a catch in the latter campaign).

But, Ivereigh pointed out, the catch to buying bundles from the NBN Co was that the RSP had to commit to not congesting their CVC. "They [NBN Co] do this by explicitly stating that they [RSPs] must not exceed 95% utilisation for more than seven hours in any seven-day period – there’s more in there, but that’s the gist of it," he explained.

The bundles included 2Mbps for an NBN50 connection and 2.5Mbps for an NBN100 connection. But given that bandwidth use was growing at about 40% per annum, a bundle with 2Mbps would need 2.8Mbps the following year to keep pace with growth.

And herein, Ivereigh said, lay the NBN Co's salvation. "So if you’re an RSP selling unlimited data plans what do you do? You can’t constrain your users (or even get more money from them by upgrading to higher data download plans) yet you also can’t let your CVC become congested.

"You just have to buy more CVC — more than the included bundled amount — to avoid congestion. This extra amount is called 'CVC overage' and NBN currently sells it for $8/Mbps/month.

"So some quick maths. If you are selling an NBN50 with its 2Mbps of included CVC, but actually have to allocate 3Mbps to avoid congestion, instead of that connection costing you $45 per month, you are now looking at $53 per month. [And] NBN Co’s revenue problem [is] solved!"

But he said there was no guarantee that the RSPs would continue to play ball as they were already either on thin margins or, in some cases, losing money.

"The good ones [RSPs] probably will go ahead and they will either have to stop selling unlimited plans or put up their prices," Ivereigh said.

"The others will simply restrict the bandwidth before it reaches the NBN Co to keep it below the 95% threshold that NBN Co have set, in order to stay within the rules. So we will be back to 2017 with its congested networks all over again. At which time we can expect the finger pointing to restart."

He said the NBN Co was banking on RSPs buying this overage. "Only time will tell if they [RSPs] actually do," he added.