Government paying 'outrageous' sums to Telstra for NBN: Vodafone CEO

'Australia needs to have a strong Vodafone,' says CEO Inaki Berroeta

The "outrageous" size of NBN payments to Telstra is one example of the number one telco's unfair advantage, according to Vodafone CEO Inaki Berroeta.

In a keynote today at a lunch hosted by the Trans Tasman Business Circle, the new CEO of the country's number three telco said policymakers must level the regulatory playing field to boost telecom competition.

"Australia needs to have a strong Vodafone ... because it is good to have strong players in the market to promote competition," Berroeta said.

"What I will do is make sure that Vodafone is a strong player in the market. What I would ask the policymakers is to do a little bit of work to create a level competition playing field so we can do this together...

"It's not about more regulation. It's about good regulation."

Policymakers should ensure that public funding of networks does not create an "imbalance in the market," Berroeta said.

In particular, he criticised the $20 billion over ten years that the government will be making to Telstra for NBN infrastructure.

"This is an outrageous amount of money, and we need to make sure it doesn't create any imbalance," Berroeta said.

"When you buy something, you need to pay what it's worth," he said. "This is like if you need if you need a car, and you buy a car, and you pay 10 times the value of the car, it doesn't make sense."

As another example, the CEO noted that Telstra has been receiving a large amount of public money under the Universal Service Obligation (USO). Universal service is important for reaching regional areas, he said, but it's important to make sure that the funding does not give the incumbent telco an unfair advantage over competitors.

In addition, policymakers should ensure all market players have equal access to wireless spectrum, he said.

Berroeta said he sees opportunities for Vodafone in the NBN. Vodafone wants to use the NBN as backhaul for its mobile services because current transmission prices set by Telstra are too high, he said.

"Vodafone Hutchison Australia will pay [Telstra] close to 6 per cent of revenues on transmission. This is more than three times what a normal company would pay outside of this market."

Read more: In brief: Telstra to switch on 700MHz 4G in Sydney, Adelaide

NBN "opens an opportunity for many players to leverage on that infrastructure," he said.

Berroeta said he is optimistic about Vodafone turning its brand around, even though customer numbers have continued to fall.

Enhancing customer service will play a key part in Vodafone's turnaround, he said. The telco has also committed $1 billion this year to its network, including an upgrade of its IP core, he said.

"Vodafone has been losing customers ... but the reality is that the business has been transforming," he said.

"We don't want to flood the market with SIM cards and report numbers. That is not really what Vodafone is about. We really want to make something that is compelling for the customer, something that is different, something that brings new value ... and then the numbers will come."

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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4 Comments

Win3688

1

What is Vodafone's MD whinging about? Sounds like he is attributing Vodafone's failure to the fault of Telstra and the government? Hadn't Vodafone have access to the spectrum auction? What they are upgrading its network is now too late and too little. Vodafone and Hutchinson Telecom have been losing money since day 1 in Austrlia. Their shareholders should seriously think if they should keep burning money in such a small and competitive market like Austrlia.

Goresh

2

""This is like if you need if you need a car, and you buy a car, and you pay 10 times the value of the car, it doesn't make sense.""

Unless of course there is only one car dealership. In that situation, you pay the price demanded or you go without a car.

"As another example, the CEO noted that Telstra has been receiving a large amount of public money under the Universal Service Obligation (USO). Universal service is important for reaching regional areas, he said, but it's important to make sure that the funding does not give the incumbent telco an unfair advantage over competitors."

The answer to this one is simple. Remove the payments for USO and instead demand that all carriers provide services on demand.

harry

3

who paid for the infrastructure .. the people of Australia and the government gave it to Telstra telecom pmg . it should be the people that reap the rewards from it not Telstra . that is something many don't realise . but alas we have a government they line their own pockets and the pockets of their friends. the cost of telecommunications in this country are a hideous joke

Greg

4

@ Harry so true. It is a shame that from early 1900's we paid for the telecommunications network in this country (PMG) only to see it sold in a 5 minute fire sale by Howard and Costello. people forget that once you sell something its gone for good, you can not sell something twice. Now we the people are left being dictated to by a monopoly company.
Telecom should have been separated into 3 companies before being sold off and the network side eg cooper network arm kept as a government body. This way any company would have had complete access to the copper network providing they paid a fee to the Gov't body. However it fell on deaf ears.

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