Are NBN plans getting faster next week? It's complicated

Alex Choros - Managing Editor + Group Telco Editor

Last updated 29 November 2023

As part of wholesale pricing changes coming into effect next month, NBN Co has removed capacity charges from its fastest speed tiers: NBN 100, NBN 250, and NBN 1000. This could result in these plans getting faster, depending on who you ask.

Capacity charges - also referred to as CVC - are often blamed as the reason users experience congestion on the NBN. In addition to paying an access charge for each plan, NBN providers have also had to pay for capacity.

Providers have typically had to try and find the right balance between CVC and the price they charge their customers. Purchase too little CVC, and customers will experience congestion during busy hours. Purchase too much, and it becomes harder to maintain competitive pricing. This is why providers report their typical evening speeds - so customers have an idea of how fast a plan is during the busiest parts of the day.

Typical evening speeds have improved over the last few years, with many providers now ostensibly offering congestion-free plans on speed tiers as fast as NBN 100. There's still a large gap between the maximum speeds an NBN 250 and NBN 1000 plan is capable of, and the speeds a customer can expect during peak hours, however.

An NBN Co spokesperson told WhistleOut that the wholesale pricing changes are designed to support faster internet speeds, but added that "[providers] also have a very important role to play in ensuring their networks are well-provisioned to accommodate customers’ increasing demand for higher speed services and more data consumption".

From the provider perspective, an Aussie Broadband spokesperson told WhistleOut that the removal of CVC on these speed tiers allows NBN 100, NBN 250, and NBN 1000 plans to be capable of their maximum speed all of the time in theory, but not necessarily in practice.

"The removal of CVC simply moves the contention point for congestion into other areas of the network," said the spokesperson. "Instead of being constricted by CVC, a user could run into congestion due to a lack of network-to-network interface (NNI) capacity, or a lack of backhaul capacity."

NNI is effectively the connection back to the NBN, whereas backhaul typically refers to the connection between a telco and the wider internet. To avoid congestion, a telco would need enough backhaul that matches the capacity they purchase on the NBN. Some telcos, like Aussie Broadband, own their own infrastructure, which allows them to cut down on this cost. Others need to purchase connectivity through a larger provider.

Backhaul is much more affordable than CVC, however. It can cost between $1 and $3 per Mbps of capacity, versus NBN Co's CVC charge of $8 per Mbps. Most wholesale NBN plans include some CVC out of the box, which reduces the amount of capacity a telco needs to buy.

The Aussie Broadband spokesperson said that there are also plenty of other factors that can cause congestion.

"Congestion can come into play at any point of the network: antiquated hardware on the user's side, a lack of capacity on the international links where content is being accessed from, or potential latency issues between the user and a content delivery network."

Looking more broadly, the effects of dropping CVC charges on high-speed plans will vary from provider to provider. In some cases, there might not be a difference. An Optus spokesperson told WhistleOut that telco doesn't expect the changes to impact its NBN speeds.

In others, it’s more of a wait-and-see. A spokesperson for CommBank-owned telcos More and Tangerine said that the companies will be speed testing in December to see if speed guidance needs to be changed, but that "typical evening speeds may still be below the maximum speed available".

When coupled with cheaper wholesale pricing for NBN 100, NBN 250, and NBN 1000 speed tiers, December is set to be an interesting month for the market for high-end plans. Not only is the fastest consumer internet in Australia getting more affordable, it could be getting even faster. At least on some providers.

Alex Choros

Managing Editor + Group Telco Editor | X | Instagram | Threads | LinkedIn

Alex Choros is the Managing Editor of WhistleOut Australia and an award-winning journalist. He's been writing about consumer technology for over a decade and is an expert on the Australian telco sector, to the point where he knows far too many phone and internet plans by heart. In addition to leading the WhistleOut editorial team, Alex is responsible for ruining the office Sonos with his troubled taste in music.

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