Telstra accuses NBN of charging too much for internet



December 13, 2018 13:44:10

Remember the dial-up days in the 1990s? Back then, just being able to surf the net was a bit of a thrill.

Key points:

  • Telstra says wholesale broadband costs from the NBN have doubled over recent years
  • NBN says businesses that use a lot of data are pushing up average costs but individuals are not paying as much
  • The latest 5G mobile networks may reduce reliance on fixed broadband and lower costs

Now most of us expect to be able to stream a Hollywood blockbuster from an access point somewhere in the home, possibly through several brick walls, and onto the television.

“The exciting thing about the industry we’re in is that you’ll continue to see developments in technology, which will benefit consumers,” NBN Co chief executive Stephen Rue said.

But Australians are finding that the latest technological advances do not always come cheap, with many complaining about the rising cost of broadband.

Telstra, which now finds itself as the NBN’s biggest customer in order to provide households with broadband services, is crying foul over the costs it faces to do that.

“We have to buy that service first of all from the NBN, and the wholesale price under the NBN is more than double from what it use to be, and that’s fundamentally the problem,” Telstra’s chief executive Andy Penn told RN Breakfast.

“Today, the average wholesale price charged by the NBN to the industry is $44 per month per customer — more than double.”

NBN’s Stephen Rue said that was not entirely accurate.

“[What that is referring to is] average revenue per user, which is slightly different from prices,” he said.

“The average revenue per user is $44 at the moment, but remember that’s across both residential customers but also business customers, and clearly business customers pay more.”

‘Bucket load’ spent on NBN needs a return

Telecommunications analyst Nick Harris, from financial firm Morgan, spends his days looking at this stuff.

He says the reality is that it costs an enormous amount to deliver the kinds of streaming services Australians demand, and NBN is simply passing that cost on, and then adding a bit.

“They’re spending a bucket load of money to build out the NBN, and in order to get a return, they pick a price,” he explained.

“So if you’ve got to get a 3 per cent return, [you ask] what do I have to charge to get a 3 per cent return?”

“And, because it’s such a large amount of money that’s been invested in the NBN, the price has gone up.”

RN Breakfast put that to the NBN boss. Mr Rue responded by saying that there had in fact been a “reduction in prices” since 2011.

The ABC then asked Mr Rue if, faced with competition, NBN could see its way clear to lower its costs for consumers.

Mr Rue did not answer the question directly.

Nick Harris said NBN Co did have significant pricing freedom, thanks to the Rudd government that initially set it up.

“The Rudd government decided the public wanted high-speed internet connection, and they’d pay in order for that to happen,” he said.

“He [Mr Rudd] said it would cost $15 billion, and here we are, in 2018, and we’ve spent double that in equity alone.

“My view is that we should have let competition sort it out, rather than making it political, and monopolising it.

“Actually, a lot of countries are happy to accept lower returns because it’s social infrastructure, and so if you take the view that it’s actually a good outcome for the country, maybe you should take the view that you’re not going to get a commercial return for that asset in its own right, but it’s a good thing for society.”

Mr Rue argued that in fact it was NBN’s financial strength that would ultimately benefit the country.

“Yes, it’s important to listen to our customers, but at the end of the day we’ve got to make sure that we provide the best economic and social benefits we can to the country, and to do that we need a strong business model,” he added.

5G mobile may cut internet costs

But there is hope that, in the not-too-distant future, the cost of streaming data in your home will come down.

That is because 5G is around the corner, which is the latest in mobile technology, which will ultimately provide home owners with everything they need to stream to their hearts content.

“I don’t think it’s a coincidence that the NBN roll-out is scheduled to be complete by the end of 2020, which is basically when you’ll see 5G a much more commercial product,” Mr Harris said.

“It’s definitely a risk to NBN but it’s years away.”






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