NBN CEO Bill Morrow has rejected the idea of a write-down by the government of all or part of its investment in the National Broadband Network.
Successive Coalition and Labor governments have categorised the NBN as an investment in order to keep it ‘off-budget’. That means that the network needs to deliver a positive return on the government’s investment over the long-term — and as a consequence places pressure on NBN to turn a profit from its customers, retail service providers (RSPs).
High-profile tech entrepreneur Bevan Slattery recently said that the government should write-off a portion of its equity investment in NBN. Last year, telco group the Competitive Carriers Coalition made similar arguments, calling for a write-off in order to reduce the pressure on NBN to recoup the cost of the government’s investment.
“If we, the management, felt the asset to which we’re putting in the ground could not earn the value that we think it’s worth then we would put forward for write-downs,” Morrow said yesterday at a hearing of parliament’s NBN committee.
“We believe there’s a lot of value to be gained from the capital spend that we’re putting in the ground today,” he said.
There is no “write-off plan and I’m not sure why people speak about that,” he added.
The CEO said that the network’s take-up rate indicated positive momentum for the project — “people are racing to get on the NBN,” he said.
“That’s still the number one issue of concern: ‘When am I going to get it?’ If we didn’t think we were going to get the 70 per cent or more take-up rate with the planned ARPUs [average revenue per user] that we have, we might have a different issue about ‘Is the asset we put in the ground currently carrying the same value we thought?’ and a write-off may be warranted.”
“That is the furthest thing from the truth right now,” Morrow added.
The CEO said NBN hadn’t had any discussions with the industry on the issue and that it “would be a silly discussion to have.”
The government yesterday announced the Australian Communications and Media Authority would investigate end user experience on the NBN.
The ACMA research will attempt to ascertain to what degree faults and poor end user experience can be blamed on NBN’s access network and processes, as opposed to issues relating to RSP networks or end-user equipment.
Morrow earlier this week took aim at RSPs over what he said was a “land grab” price war, which has resulted in some cases in RSPs either under-provisioning capacity (CVC) or seeking to push low-speed NBN plans — with the end result in both cases being a poor customer experience.
At yesterday’s hearing Vodafone called for changes to NBN’s key wholesale pricing constructs, including CVC.