Robin Eckermann, who led the creation of TransACT and served as its chief architect during the 2000-2003 network rollout, said today in a reaction to an op-ed in these columns on Wednesday that the company's claim that one of the most obvious causes of poor performance lay in the inadequate CVC capacity that RSPs are purchasing was correct.
"NBN Co likes to blame the RSPs for this – but in my view, the RSPS are responding quite naturally to the high cost of CVC capacity set by NBN Co in its ill-fated quest to push up the average-revenue-per-user (ARPU) and thereby deliver an acceptable return on the network cost," he said.
Eckermann (below, right) said he had used the term "ill-fated" advisedly "because if ARPU rises, retail prices will also rise and some users at the affordability margins will relinquish fixed broadband in favour of ever more competitive and capable mobile alternatives".
"Return on investment will prove as difficult for NBN Co as it has for other Australian access network investments – such as the Telstra and Optus HFC networks and TransACT's original FTTK/VDSL network," he added.
In the past, Eckermann has been quoted as saying that the pressure to keep the cost of the NBN off the budget books by "clinging to the illusion that it will be a profitable investment has created a massive problem that will sooner or later have to be addressed".
He made a similar comment today, saying that "a key element of the way forward needs to involve unlocking performance by dramatically reducing or eliminating CVC charges, accepting that (in the words of Bevan Slattery) you can have any two, but only two, of the following three objectives: performance, return-on-investment and affordability.
"The 'book value' of the NBN needs ultimately to be written down to something more consistent with its earning potential - but such a writedown will be more than offset by the strategic benefits to Australia in its exploitation of the growing digital economy."
Eckermann claimed that until something like this was done, most of the NBN's transformative potential was being "forfeited by pricing policies that drove users to lower connection speeds and/or nobbled the performance of circuits during busy periods which, by definition, are when users most want connectivity".