NBN Co is excluding Australians from broadband, Telstra says – Telco/ISP
Telstra accused NBN Co of pricing itself – and Australians – out of the fixed broadband market, and becoming a network “only for those who can afford it”.
In an as-yet-unpublished 84-page submission to the ACCC, Telstra said the growing substitution of NBN services with cellular fixed wireless was “inefficient” and not in the interest of internet users.
Rather, he argued that NBN Co’s prices should be much lower, but were inflated by excessive construction costs, partly as a result of past government policy.
“NBN Co’s current wholesale prices will mean that NBN will become the only network for those who can afford it,” Telstra said.
“It will not be accessible to many Australians who need it.”
Telstra said there were several signals that NBN Co’s prices were simply too high, leaving the network “heavily underutilized”.
Telstra estimated that “25% of premises disconnected from the copper network have chosen not to migrate to NBN”. He said it was “largely related to charging high wholesale prices”.
The phone company also cited fixed service substitution in part of the cellular wireless market, which it called “limited and suboptimal response from customers and RSPs.” [retail service providers] to the inefficiently high wholesale prices of NBN Co.”
“Price-sensitive customers choose not to pay high prices for low-speed (50 Mbps and below) NBN plans and instead opt for mobile and fixed wireless for broadband where available,” Telstra said. .
“High wholesale prices have also led providers to ‘lose faith and confidence’ in NBN as a solution for their customers. RSPs have actively sought out alternative infrastructure (such as fixed wireless) that is more affordable to end users and provides more investment and RSP reward opportunities.
“RSPs are able to offer fixed wireless services in the 50-100 Mbps speed range at a lower price than they are able to offer on NBN.”
Although some cellular operators are more enthusiastic about bringing NBN customers to the net via a fixed wireless offering, Telstra did not consider the substitution a good outcome, pushing instead to address the root cause.
Additionally, Telstra stated that “willingness to pay for high-speed NBN packages (100 Mbps and above) is insufficient to justify NBN Co’s existing pricing”.
A new pricing model currently before the ACCC “will amplify this problem, as it attempts to make the 100 Mbps plan the minimum available, but at an even higher wholesale price.”
The ACCC has previously raised concerns about this proposed model.
Telstra said approval of the new pricing model would “lock in an initial increase in wholesale broadband prices (up to 20% [on 50Mbps]) and increase these high prices year on year until 2040 (up to 10.8% per year). »
Telstra said NBN Co got stuck in a “negative cycle” on its prices.
“NBN’s broad approach to price regulation means that if demand is lower, prices need to be higher to recover average cost – but as prices are high, demand falls,” Telstra said.
“There must be intervention in this negative cycle, by setting lower wholesale prices to encourage greater demand.
“That way, NBN will be accessible to everyone who needs it, not just those who can afford it.”
Governments partly responsible
Telstra is scathing of the broader proposal, including the new pricing model, presented by NBN Co, and has called for its rejection.
Known as the Special Access Company or SAU, it governs tariff and non-tariff conditions on the network until 2040.
Its review by the ACCC came after NBN Co’s top RSPs united to demand a fundamental change to NBN Co’s wholesale pricing structure.
The process became particularly lengthy, and with no solution in sight, the RSPs lost patience, asking the ACCC to set the regulated prices itself.
Telstra accused NBN Co of ignoring the RSP’s comments and producing a revised SAU which, “in many areas, … fails to meet the minimum acceptable standard for a regulatory framework”.
Telstra did not put all the blame on NBN Co, saying previous governments had contributed to the current pricing model mess.
“Governments will force NBN Co to engage in inefficient spending while it is under government ownership,” Telstra said.
“Inefficient costs spent under government direction have one of two implications: they may be recovered from end users, which is not in the long-term interest of end users (LTIE), or they may lead to a reduction in the value of government equity in NBN Co, which would be in the LTIE.