Friday, 11 February 2022 13:45

NBN Co's financial worries far from over, says telco expert Budde Featured

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Paul Budde says NBN Co is still not out of the financial woods. Paul Budde says NBN Co is still not out of the financial woods. Supplied

The NBN Co's continuing bid to placate regulators, retailers and consumer organisations means its financial worries are far from over, independent telecommunications consultant Paul Budde says.

His comments came following the company's release on Thursday of its results for the six months from June to December 2021, showing an increase of $1 in its average revenue per user to $46, though red ink still remains on its balance sheet, with a loss of $857 million for the six-month period.

Budde pointed out that in the search for more subscriber s to increase its income, the company had announced it would start rolling out its latest rebate campaigns in April under the names Step Up and Light Up.

These rebates only apply for six months and then the full price cuts in and are provided to the retail service providers who can then make offers to their customers.

The offers in question are:

  • Upgrade from 12Mbps to 25Mbps and receive an $8 rebate;
  • Upgrade from 12Mbps to 50Mbps, or the 25-50 tier for FttN/FttB and get a $10 rebate;
  • Upgrade from 25Mbps to 50Mbps or from fixed wireless to Wireless Plus and get a $2 rebate; and
  • In May, a second package will be made available for upgrades to 100/40 services.

Outlining the issues faced by NBN Co, Budde said: "The company has been plagued by ongoing requests from its regulators, retailers and consumer organisations to come up with better pricing schemes.

"The ACCC is still investigating NBN Co’s complex wholesale charging system. Consumer organisations have also made it a political issue, arguing that people who can’t afford broadband should still get it as it is essential for their social and economic existence."

He said it was unlikely that anybody would contest the company's argument that it should be allowed to build a financially viable business.

"However, the issue is that its cost base is far too high and that retailers and consumers are paying the price for the political footballing with the NBN Co, which has resulted in costs much higher than were originally envisaged by the then Minister for Communication Malcolm Turnbull," Budde said.

"He [Turnbull] had mentioned costings between $25 billion and $29.5 billion and the current costs are edging towards the $70 billion mark."

He pointed out that NBN Co offered rebates from time to time to placate RSPs. "This allowed them to maintain their overall pricing structure with some drip feeds to the market," Budde added.

"The reason why NBN Co keeps dragging its feet on this issue is that they need these higher prices for their financial viability.

"The discounts were appreciated during the Covid pandemic, but it was not just charity as the pandemic has also seen that customers were forced to pay for higher quality plans, especially when working from home and online education led to significant increases in the demand for broadband capacity within households."

Budde said the ACCC had released figures showing that a 58% of NBN users were on connections that had download speeds of 50Mbps, only 19.2% used products that had download speeds of 100Mbps or faster.

But 10.4% of users had 12Mbps services and 12.4% 25Mbps, showing that many lacked sufficient bandwidth to cope.

"During my radio interviews with stations in regional and country areas, time and time again I hear mayors of towns, farmers and ordinary users complaining about the quality of the service," he said.

"...fixed-wireless and satellite services are continuing to be a major problem area as are - be it at increasingly smaller numbers – the poor performing FttN services.

"Lack of stable mobile access remains the other major issue that plagues regional and rural communities across the country. Mobile access remains a hit and miss outside metro Australia."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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