Report: Consumers to pay 15 percent more for Telstra built network

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Report: Consumers to pay 15 percent more for Telstra built network

Australian consumers will have to pay 15 percent more for broadband access if Telstra is successful in its bid to build the Federal Government's $4.7 billion funded national broadband network (NBN), according to a new report.

The report, titled "Telstra return on a national FttN network: community impacts", estimates Telstra would have to charge 15 percent more for network access for it to achieve its publicly-stated 18 percent after-tax return profit target.

The report was conducted by independent economic consultancy group, the Centre for International Economics (CIE), at the request of the Competitive Carriers Coalition (CCC) – whose members include Telstra rivals; Macquarie Telecom, iiNet and TransACT.

"To be able to achieve its targeted return on equity of 18 per cent, Telstra would have to extract additional revenue from the network users through higher prices," said the report's authors, Mayela Garcia and CIE director Kerry Barwise.

"Higher prices in industries will be passed on to consumers in the form of higher prices for consumer goods and services, leading to a general increase in the level of prices."

Exacting a further 15 percent from consumers’ pockets for network access would equate to an additional $897 million in Telstra’s coffers, claimed the report.

If the network was to cost $15 billion, an estimate Telstra boss Sol Trujillo recently quoted to The Australian, consumers would pay an additional $1.4 billion a year for broadband services.

The CIE estimates were based on Telstra’s calculations that the NBN would cost approximately $9 billion to build (including the government's $4.7 billion contribution) and comparisons of what consumers would pay for broadband services from an alternative operator.

The report also hypothesised that a network build based on Telstra’s cost estimates would increase inflation, reduce national growth, lower wages and reduce national consumption.

Telstra Wholesale managing director Kate McKenzie lashed out at the report, branding it as a “bogus”.

"This is a completely bogus report that has been bought and paid for by a bunch of competitors who want one thing only — to stop the building of Australia's national broadband network and keep their current cosy arrangements," she said in a statement.

"The report has no basis in fact. It is a dishonest distortion that is designed to do nothing but delay the process."
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