NBN Co blames Telstra payments as a factor keeping prices high

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NBN Co blames Telstra payments as a factor keeping prices high

Feud escalates.

NBN Co has laid part of the blame for wholesale price woes at Telstra’s feet as pressure mounted on the network builder to revamp its offerings.

A day after Telstra CEO Andy Penn pushed for wholesale changes to NBN prices, NBN Co CEO Stephen Rue countered that Telstra was one reason that prices are at current levels.

“Let’s not forget that the sum of all NBN payments to Telstra was around $2 billion this year,” Rue said.

“Our corporate plan points to a continuing payment to Telstra for access to ducts, dark fibre and facilities of $1 Billion annually from FY21, representing 20 percent of forecast revenues, and continuing for decades after the build is completed. 

“This has an obvious impact on wholesale prices.”

In the past week, a large number of NBN Co’s retail service providers, including Telstra, Vocus, Vodafone and Aussie Broadband have called for a significant revamp of NBN prices.

Rue said he was not surprised by the calls “as the telecoms industry heads into financial results season”.

“What retailer, regardless of industry, doesn’t want to get cheaper services from their wholesaler? I completely understand this approach,” he said.

Rue argued that “criticisms” would follow “any project of this size and structural reform”. He suggested many of the current criticisms were “unfounded”.

“Criticisms that our business model creates an unsustainable industry are unfounded,” he said.

“If this was the case, we would not see retailers signing up more than 40,000 new customers to the NBN every week, and we would not have seen the 75 percent increase in the number of service providers selling NBN services over the last four years.”

Rue also took aim at research Telstra commissioned and submitted to NBN Co’s pricing review, which claims that “Australia’s bitstream pricing is between 13 percent and 93 percent higher than comparison countries”.

“Claims about Australia’s internet pricing being expensive in relation to the rest of the world are also unfounded,” Rue said, countering with NBN Co-commissioned research on “affordability”. (iTnews has previously dug into this particular study and its issues).

Rue said that outside of the payments to Telstra, NBN Co had other costs to contend with - the cost of servicing uneconomic parts of Australia that were previously under-served by others, along with maintenance and capacity improvements to keep pace with users’ data demands.

Rue also added that NBN Co did not exist to serve RSPs but “all Australians”.

“In all the industry gnashing about NBN Co’s pricing model, there is one key point that is always omitted - and that’s the fact that [the] NBN exists to serve all Australians,” he said.

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