iiNet warns NBN circuits too expensive in the Netflix era

Movie backhaul breaking back of retailers

iiNet reckons the runaway success of Netflix in Australia is going to put the National Broadband Network pricing model under pressure.

The problem is that the prices retailers pay the network company nbnTM is heavily influenced by download volumes. Backhaul from nbnTM points of interconnect back to a retail service provider (RSP) network is carried on a per-Mbps per month basis.

That part of the service, called the Connectivity Virtual Circuit (CVC), costs AU$17.50 per Mbps per month (after a price cut earlier this year), a sting on retailers whose customers are on a fixed monthly price (such as iiNet's entry-level $59.90 NBN plan).

The company's CEO David Buckingham has told The Australian Financial Review he's worried that unless nbnTM cuts the CVC charge again, the “Netflix effect” will make NBN services “unsustainable” for RSPs.

When Netflix launched, iiNet found itself unable to cope, with the outfit fielding as much as a year's worth of data growth in six weeks.

Buckingham told the AFR he hopes nbnTM will move before ISPs like iiNet have to hike their consumer plan prices.

The Register notes that nbnTM has always anticipated that its CVC prices would fall over time. ®

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