Additional Wholesale Costs

Access Seekers will have significant additional costs to the NBN Co ones, in particular, backhaul from NBNCo POI to the Access Seeker Point of Presence. The 2014 Telstra Wholesale Rate Card for Domestic Transmission Capacity Service indicates prices of around $48 /month for 5 km, $171/month for 1000~2000 km (assuming a 100 Mbps purchase). Hence, for Access Seekers without their own backhaul infrastructure, backhaul costs will exceed Connectivity VC costs, given the latter price of $20 Mbps/month.

In addition to backhaul costs, Access Seekers fund their own infrastructure (servers, routers), bulk Internet connectivity, marketing, staff, premises etc.

In short, the NBN Co wholesale price reflects neither the total per subscriber cost for Access Seekers, nor the eventual retail prices for NBN based broadband products.

Summary

The NBN Co pricing model separates capacity costs from access costs. This allows Retail Service Providers to differentiate their products, based on the amount of NBN Co capacity purchased. The capacity cost is a relatively small component of entry level wholesale broadband prices, however becomes significant for higher speed services, particularly for enterprise clients. As well as the NBNCo wholesale cost, Access Seekers face significant additional costs, in particular for backhaul.

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