Hackett's NBN rejig costs customers: Conroy

Communications Minister Stephen Conroy has dismissed Internode's proposed pricing model for the National Broadband Network (NBN), stating it will pass costs directly onto consumers.

Communications Minister Stephen Conroy (Credit: Josh Taylor/ZDNet Australia)

Internode managing director Simon Hackett warned last week that the pricing model for the NBN, in conjunction with 121 points of interconnect, would price internet service providers (ISPs) with less than 250,000 customers out of the national market.

On top of the basic charge for access to the NBN for each individual customer, there's also a connectivity virtual circuit charge which secures bandwidth to a consumer from the point of interconnect. There's also another charge to connect from the point of interconnect to the ISP's backhaul. The former charge, in addition to the costs for deploying a connectivity virtual circuit at every point of interconnect, would be a burden on small ISPs, according to Hackett.

One of Hackett's proposed options was — instead of charging a CVC cost — to increase the basic wholesale cost (Access Virtual Circuit or AVC) for every customer by around $1 to even the balance.

Conroy today rejected this proposal, telling ZDNet Australia that it will be adding costs onto the consumer.

"I think he's acknowledging that [the proposal] will put up the AVC pricing, I mean he's offered a range of options, but the government has made a decision we're not going to charge pensioners more per month," he said. "Simon's said it's only a dollar a month for the base model but we're not going to start charging people more than what they're paying today."

Conroy acknowledged that the pricing model had been the subject of "very informed debate" online, led by Hackett.

"I think some of Simon's arguments have been very valid but that doesn't mean they are the answer to all the solutions."

Conroy said that Internode, the government and NBN Co were in agreement that there should only be 14 points of interconnect on the NBN; the argument was with the Australian Competition and Consumer Commission.

"The bottom line is Simon is agreeing with what the government and NBN Co put forward and I wish that the debate had perhaps gone a different way but we have accepted the umpire's decision," he said.

When questioned as to whether ISPs would be burdened with the cost as Hackett had warned, the minister argued that under the current pricing model, the market would evolve and competition would ultimately drive lower prices. He said that the fact that twelve ISPs today signed up to offer services at the first mainland release sites for the NBN showed that competition is alive and well.

"It seemed like more than five to me. Predictions of doom and gloom are a little early and the point is let's see how the market evolves in this," he said.

Conroy today launched the Australian Communications Consumer Action Network's consumer guide to the NBN. Conroy said that the plain-speaking guide is aimed at explaining the roll-out to consumers in an area where "geeks tend to dominate the debate".