Home Telecoms & NBN Carriers group asks govt to write down NBN investment

Carriers group asks govt to write down NBN investment

The spat over whether prices charged by NBN Co make gigabit connections unaffordable or whether Australians were disinterested in super-fast broadband has been termed "a silly circular argument" by the Competitive Carriers’ Coalition.

The group added that this was a good reason for the federal government to write down its investment in the NBN.

The CCC is an industry grouping that represents the interests of non-dominant telecommunications carriers, with members being part of the sector that is involved in fixed line, mobile, residential, corporate, government, voice and data markets.

NBN Co chief Bill Morrow fanned the flames during his presentation of the company's half-yearly results, claiming that Australians were not interested in gigabit connections, even if they were doled out free. Morrow later wrote a blog post to try and explain why retail service providers are not offering gigabit speeds, even though the NBN has the capacity to provide it.

A CCC spokesman said Morrow was right on one point - that there was no residential demand for NBN Co's gigabit broadband at the prices that RSPs would have to charge.

The real problem, the spokesman claimed, was that NBN Co's pricing model – which aimed to fulfil the government’s goal of a “return on investment” – was "unsustainable, self-defeating and was creating a vicious cycle that ultimately could undermine the viability of the NBN".

This wholesale price model put retailers in a "price squeeze", the spokesman said. "Retailers’ costs for using NBN rise unsustainably as users consume more data, but their revenue does not, forcing them to push their customers toward lower download speed products. But this in turn means less revenue growth per user for NBN, putting pressure on its return on investment."

He said the only way out was "to restructure NBN Co’s balance sheet by writing off some of the value of the money the government has invested, adding, "This is exactly what would happen in a private company, and exactly what the CCC and others have been saying for 18 months".

"Australian consumers’ passion for high-speed broadband is easily seen in the mobiles market where the race from 3G to 4G and now 5G is all about meeting the download speed demands of mobile users. Does the NBN Co really think customers are happy with speeds on fixed lines below those emerging for mobiles?” the spokesman asked.


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Sam Varghese

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A professional journalist with decades of experience, Sam for nine years used DOS and then Windows, which led him to start experimenting with GNU/Linux in 1998. Since then he has written widely about the use of both free and open source software, and the people behind the code. His personal blog is titled Irregular Expression.