Telstra CEO expresses ‘surprise’ at NBN Co moving on enterprise market

NBN Co diverting capital to build fibre for businesses in areas that are already heavily networked, Telstra CEO says.

Telstra CEO Andy Penn

Telstra CEO Andy Penn

Credit: Telstra

NBN Co seeking to grow its share of the enterprise networking market is a “little bit of a surprise” for Telstra, the telco’s CEO Andy Penn says.

Addressing media during a briefing at the telco’s enterprise conference, Telstra Vantage, Penn said that it was particularly surprising because the rollout of the NBN was “slowing down” as it enters its final stages while NBN Co was simultaneously “diverting capital into building more fibre in CBDs”.

“Effectively what it means at a practical level is capital is being diverted from rolling out the core purpose of the NBN to this, so that’s a surprise,” Penn said.

“I had understood the purpose of the NBN was to provide broadband connectivity to every household in Australia not to build fibre for enterprise customers,” the CEO said, adding that “lots of telcos” already have fibre throughout CBDs.

NBN Co has indicated it intends to eventually grow its revenue from businesses to $1 billion a year. Last month it revealed that its FY19 revenue from the business segment had grown 54 per cent year-on-year.

“We are making great progress with the business segment contributing more than $388 million in revenue in FY19 and we expect this segment to remain solid and for residential and business customer demand for higher speed tiers to continue in FY20,” said NBN Co CEO Stephen Rue.

In October 2018 NBN Co launched an Enterprise Ethernet offering. The service “was built in recognition of the fact that businesses, particularly large organisations, typically have higher levels of corporate data requirements due to large-scale distributed workforces, operating data-hungry applications and a higher incidence of mission-critical systems such as enterprise network systems and cloud-based solutions,” NBN Co’s corporate plan states.

Another element of NBN Co’s business strategy is its Fibre Expansion Program, which extends existing fibre infrastructure to help retail service providers (RSPs) “develop new opportunities in selected areas with a high business density,” the plan states.

NBN Co expects 200,000 sites to benefit from the program by the end of FY21, with 50,000 sites already made available to RSPs.

“By extending the reach of existing fibre links, the Company can better meet growing demand from Australian businesses for consistent high-speed committed bandwidth and business-grade service levels,” the company’s corporate plan states.

Penn has been an outspoken critic of NBN Co's wholesale pricing. Telstra expects a $3 billion hit to its earnings due to the NBN rollout.

The author's travel and accommodation for Telstra Vantage were provided by Telstra.

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