Telstra CEO demands $20 a month NBN price cut

Telstra CEO Andy Penn has called for a “more than $20” a month cut to NBN Co’s wholesale charges because reseller margins are “rapidly falling to zero”.

Penn used the telco’s annual general meeting to renew his criticism of NBN charges, which he first raised back in April.

He noted the growing disparity between wholesale prices for copper access, which are regulated by the Australian Competition and Consumer Commission (ACCC), and those set by NBN Co.

“The price we charge our competitors for access to our network, when they provide broadband services to their customers, is set by the ACCC. On an equivalent basis to the NBN, this is currently in the order of $20 per month per customer,” Penn said.

“The average wholesale price currently being charged by NBN Co to the industry is $44 per month per customer, more than double and their plan is to increase this further to $51 by FY22.

“That is why Telstra and all of the telcos selling NBN today are facing a fixed line market where reseller margins are rapidly falling to zero.”

Penn countered arguments that Telstra should simply “put our prices up” at a retail level to deal with rising NBN Co charges (and help the network builder meet its average revenue per user goals).

“I do not believe we can simply charge our customers more – that’s not the right answer,” Penn said.

“Nor can we continue to sell NBN making little or no money. Something needs to give.

“The current arrangements are unsustainable, and ultimately this can only lead to poorer service and higher prices for broadband for all Australians.”

Penn suggested that any wholesale price cut would need to be drastic.

“It has to come down and not by $2, but by more than $20,” he said.

Penn said that while he understood the government had invested a lot into the NBN “and the current high prices are set to recover that investment”, he said that this was simply “the lot of the telco”.

“There is not a market in the world where telcos are increasing their prices at this rate - we are innovating to provide greater speeds and capacity for customers for largely the same price,” he said.