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2016-10-28

telco industry

Telco industry veterans call for NBN write-down

Two well-known participants in the telecommunications industry have called for a write down of the NBN as debate about the usage prices facing Retail Service Providers (RSPs) intensifies. 

Bevan Slattery, the founder of a number of successful wholesale broadband businesses (Pipe Network, Megaport, Superloop) has been a critic of NBN pricing for a number of years. 

Now he is proposing a new RSP usage charge of between $3 and $5 per Mbps – well below the current price of $15.75 and less than half the $10 level which nbn CEO Bill Morrow is forecasting for next year. 

Such a drop in prices, Slattery says, is needed to encourage use of the network, particularly at the higher speed tiers for which, at present, there is little take-up. Some 75% of NBN users take up plans offering speeds of 25Mbps or less. 

What’s the point? 

Of course the point is that the higher prices are necessary if the NBN is to make a commercial return on its (up to) $56 billion construction costs. But that aim will be self-defeating if the end result is underuse of the network. 

Slattery suggest around $20 billion of the money spent so far may need to be written off to allow a workable wholesale pricing structure.  And former Telstra executive and industry insider, Bob James agrees. 

“We need a much larger (wholesale) price drop,” he says. 

“Put simply, about half the cost of the NBN will need to be written off sooner or later for NBN wholesale prices to support globally competitive retail packages.”  

Source: Communications Day

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