Why are NBN plans capped at 100 megabits per second (Mbps)? Well, I guess the simple answer is that they actually aren’t.
It is possible today in some places in Australia to buy plans that are 150Mbps, 250Mbps and even higher. But there are a couple of reasons why most ISPs don’t offer plans higher than 100Mbps, and why most customers aren’t buying them when they do.
Number one reason is technology. Just as long-distance copper ADSL lines are limited in the speeds they can deliver, some of the current technologies that deliver internet to customers just will not physically cope with speeds higher than 100Mbps (or often even lower speeds).
But what about value for money? Let’s see how Aussie Broadband’s plans stack up against some of the big boys.”]
Technologies that use beams rather than wires to your house – such as fixed wireless and satellite – are significantly speed restricted and can even be affected by weather.
Fibre to the node, which uses older copper lines for the final leg of the journey, is generally not capable of anything higher than 100Mbps and often sits at lower speeds than that, depending on your distance from the node (sometimes described as “node lotto”). There are some new technologies coming soon that may change this, but for the time being it’s a restriction.
Fibre to the Curb is generally less restrictive on the speeds you can get, as the only copper link is between the curb and your house. This technology has the capability to go above 100 Mbps but currently NBN does not offer this.
Optic fibre straight to the house (fibre to the premises or FTTP) is certainly capable of speeds higher than 100Mbps; however, only about 20% of Australians are or will be connected through FTTP.
At Aussie Broadband, we offer plans of 150 and 250Mbps to customers on FTTP where our network capacity will cope, but only about 300 customers around Australia have taken up these plans. Corporate enterprises with their own dark fibre networks often have much higher speeds.
Number two is NBN charges. Every internet provider, like Aussie Broadband, has to pay NBN for two things: AVC and CVC. AVC is essentially the cost of being able to link a customer to the NBN – think of it like a freeway.
As a guide, NBN charges $30 more for an AVC at 250 Mbps than it does for a 100 Mbps AVC. This doesn’t seem like a lot more, but you need to add extra CVC into the equation too.
If AVC is the freeway, CVC is how many lanes your internet provider is buying on that freeway for their customers to use. During the day it usually doesn’t matter because traffic is low. At peak hour, though, when everyone wants to use their internet, the number of lanes certainly makes a difference. Not enough lanes equals congestion.
NBN offers some good wholesale incentives for internet service providers to buy decent numbers of freeway lanes for particular plan speeds, especially those on 50Mpbs. There’s a new pricing now for 100Mpbs plans but it relies on customers staying on that plan for a certain period of time before providers can get the good price, which can be risky – and there’s no guarantee that NBN will keep this lower pricing into the future as it’s a short-term rebate.
It’s important to understand also that prices for CVC in Australia are amongst the highest in the world, and there are no discounts for speed tiers higher than 100Mbps. For Aussie Broadband, that means that we just can’t afford the CVC to be able to offer unlimited plans for those higher speed tier users, which is a restriction. Typically, customers buying higher speed plans use considerably more data than customers on lower speed plans.
To have enough CVC (freeway lanes) sitting around spare for customers to purchase 500 or 1000 Mbps plans doesn’t make sense either, as 1000 Mbps of spare CVC would cost $8000 per month.
So to sum it up, NBN plans aren’t actually capped at 100Mbps – but it’s highly unlikely we will see higher speed plans become more common until technologies improve and economics change.
Fast NBN 100 plans
Here’s the pricing for Australia’s fastest unlimited NBN 100 plans:
Phillip Britt is managing director at Aussie Broadband.
This story has been updated since its original publication.