Vocus urges incoming government to refocus NBN policy

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Vocus urges incoming government to refocus NBN policy

Also starts preparing to separate its retail business.

Vocus CEO Kevin Russell has challenged the future federal government to rein in NBN Co from its constant “mission creep” into contestable markets.

Russell also told the CommsDay Summit in Sydney that NBN Co alone could not meet its own organisational purpose of “lifting Australia’s digital capability”, and that industry also needed to be able to play a part.

“For whoever governs in three weeks, please - we cannot afford another narrow, short-term, unsustainable NBN focused policy,” Russell said.

“Instead we need a balanced strategic industry policy that promotes sustainable competition, prioritises private infrastructure investment, and embraces the deployment of new technologies which can uplift our country’s digital capability.”

Russell blasted NBN Co’s constant incursions into areas of the market that the private sector already served, while being protected from infrastructure-based competition itself.

“We now have a market where a government owned monopoly receives taxpayer funding to compete against alternative private infrastructure – and where competitive private operators are directly taxed to subsidise this monopoly,” Russell said.

“We’ve seen consistent ‘mission creep’ into competitive markets throughout the NBN’s existence, but particularly in recent years. 

“As an example, NBN Co’s latest mission creep into third-party data centre facilities, an existing competitive market, has a direct impact on how we at Vocus think about investing in new fibre. 

“A government monopoly pushing into contestable markets can only have a negative impact on private infrastructure investment.”

Russell said the LNP’s telecom policy of “maximising the value of the investment” in NBN Co was at odds with “the historical direction in Australia of promoting private infrastructure investment.”

He also used his speech to unveil a $1 billion investment by Vocus into its network services business over the next five years.

The billion-dollar injection would help the telco capitalise on digital and cloud growth and increased demand for bandwidth in a secure fashion.

It would also prepare Vocus for emerging opportunities, such as providing ground infrastructure for low earth orbit (LEO) satellite constellations, and meeting future edge computing demands.

However, many of the expansion projects counted in that billion-dollar spend were previously announced, or did not have specific values attached to them.

Retail separation

In addition, Russell also said Vocus has started to separate out its retail ISP businesses - Dodo, iPrimus and Commander - with a view to selling them.

A sale has been on the cards now for at least two years.

That is now taking shape, with Russell saying that Vocus “has formally commenced an internal separation process, to give us a clear picture of retail as a standalone operation with a view to a potential future sale or IPO.” 

“Our retail business is now in a good financial position having managed through the economic impact of NBN,” he said.

“It has a strong team, good assets, a market leading cost to serve and is once again performing well in-market. 

“This separation and likely sale process should free up the retail business to better compete and grow, while raising significant additional funding for Vocus network services.”

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