Aussie Broadband predicts long wait for affordable gigabit speeds

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Aussie Broadband predicts long wait for affordable gigabit speeds

Backs calls for NBN writedown.

Aussie Broadband managing director Phillip Britt believes affordable gigabit speeds in Australia are still “a while” away, requiring - in part - “a change of mindset at NBN Co” to become a reality.

There are hopes, however, that a change of mindset at NBN Co could come sooner rather than later, with the outcome of the federal election in May a determining factor.

Appearing in a Reddit Ask Me Anything (AMA), Britt predicted that the path could be slow, even for mobile operators that have also been touting gigabit speeds.

“I think it will be a while before we see affordable gigabit here,” he said.

“Given only a small part of NBN has been built as FTTP [fibre to the premises], and they are limiting HFC and FTTC [fibre to the curb] currently to 100Mbps, it’s going to require a change of mindset at NBN Co to achieve this.

“Mobile will be able to get higher speeds in the shorter term but sustaining these speeds in peak times will be the issue.”

Britt also joined a growing chorus of industry in calling for a writedown of the value of the NBN.

Telstra CEO Andy Penn made a rare foray into politics over the weekend, arguing that a future Labor government at the federal level could translate into cheaper broadband prices.

The hope is that a writedown of the value of the NBN would mean NBN Co is under less pressure to seek high financial returns, and could therefore drop its wholesale prices.

Britt believed a writedown could have a positive effect on 100Mbps prices. These are currently subject to a special pricing promotion, though the long-term future of the discount is unclear.

“I believe we will see the price of the 100Mbps tier reduce over time but it will require a government writedown of the NBN for this to occur,” he said.

“They [NBN Co] can't hold onto the $51 average revenue per user (ARPU) amounts they are trying to achieve [by 2022] because the mobile guys will wipe the floor with them.”

On mobile risk, Britt believed NBN Co’s economics could suffer from the impending launch of 50Mbps-plus wireless services by Optus, again pressing the case for a writedown.
“[5G] will have an impact - the question becomes how much,” Britt said.

“I think it will eat into the transient market where people are moving houses every 6-12 months or so, but for people who tend to be more fixed at a location, they will continue with fixed line services as the performance tends to be more consistent.

“5G will impact NBN Co’s profitability though, and l think we will see a writedown here when there is a change of government.”

Aussie Broadband last week kicked off a major overhaul of its network, replacing most of its routing equipment and adding significant intercapital and international capacity.

It has recently hit the 100,000 customer mark, and the network upgrade provides the scalability to serve half a million customers, should the retail provider continue to grow as it has.

Britt said that Aussie Broadband’s focus over the next decade “will be on trying to get at least 10 percent of the Australian market.”

However, he noted the financial headwinds in being able to achieve that were not insignificant.
“This is an incredibly low margin industry and trying to maintain really high levels of support and network quality is difficult whilst making a buck,” he said.

“Thankfully we seem to have struck a balance with our customers seeing the value of the offering.”

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