NBN Co wholesale pricing too high: Telstra

NBN Co capital costs could lead to high broadband prices for consumers, argues telco

Telstra has criticised NBN Co for having too much flexibility over pricing of National Broadband Network (NBN) wholesale services in a submission to the Special Access Undertaking (SAU) consultation paper.

The SAU was submitted to the Australian Competition and Consumer Commission (ACCC) in December 2011 and is designed to guarantee fixed wholesale prices for the next five years to service providers. It also sets out a 30-year regulatory framework via which the company will set price and non-price terms and recover rollout costs, subject to ACCC regulation.

In its submission, Telstra argued that there appeared to be no “definitive commitments” made for initial pricing of future NBN products and services.

“The limited scope of the price controls and the degree of flexibility the NBN Co SAU gives NBN Co over the pricing of new products and ancillary charges should be a key focus of the ACCC’s consideration of the SAU,” the submission reads.

“Given the proposed term of the NBN Co SAU of some 30 years, it may be anticipated that within that term many new products will be introduced as technology evolves and end-user preferences change.”

Telstra also wrote that the SAU period of 30 years was “too long” and there was insufficient provision for review of the SAU.

It also criticised the weighted average cost of capital (WACC). According to Telstra, the 8.6 per cent WACC would be too high and could lead to high broadband prices for consumers. “Wholesale prices would be higher than necessary, which would likely result in less incentives for retail service providers to compete with one another,” the submission reads.

Optus has also raised concerns about the NBN Co's capital costs. In November 2011, chief executive, Paul O'Sullivan, said that NBN Co asked for limits on the ACCC’s ability to scrutinise its initial capital build. “I’m sorry, but as an infrastructure monopoly, someone has to make sure this thing’s spending is efficient or consumers will end up paying for it,” he said at the time.

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More about: ACCC, Australian Competition and Consumer Commission, etwork, Optus, Telstra
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Comments

Francis Young

1

Nonsense, but of course this is Telstra speaking. The fact is that NBNCo operates under parliamentary oversight.

Should NBNCo introduce a new product during the 5-25 year window Telstra is talking about, its wholesale pricing will be set by parliament, not a corporate boardroom, unlike the regime we have endured since Telstra secured 100% of the national copper infrastructure.

liz

2

Years ago, Telecom made a profit and paid no dividends. That profit was an operating surplus which was spent keeping the copper network in good order. When the bean counters decided to give that operating surplus away to 'shareholders' there was less money for the copper network, the microwave links and so forth. Then there was no money for anyone to answer the phone at Telstra's end, no one to fix the faults. The senior techs were fired or made redundant. So now we will have a new backbone service, a new service for the last mile, and it will have an infrastructure budget. We will have to pay. How else will we get a working service again?

Pat

3

This isn't true, the NBN plans by Internode are miles cheaper than my current plan, it takes me more than 6 hours to upload my 1080p youtube videos on ADSL2+ & more than half the time it fails, not good enough Telstra.
Bring on the Fiber NBN rollout! WE NEED IT!

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