NBN pricing: 'We will meet the market,' Quigley says

James Riley
Tuesday, 15 September 2009 15:54

IT Policy - Government Tech Policy

End-user pricing for access to basic services through the National Broadband Network would need to be comparable to existing price levels for the venture to be successful, NBN Company executive chairman Mike Quigley says.

Industry estimates that suggested the NBN would charge rates that would put the cost to end-users at up to $200 are wrong, he said.

"In the end, the reality is we’re going to have to be priced to meet the market," Quigley said during his first media conference.

"There’s no other way of doing that. Why would a customer move from a service that they have today to a much more expensive service unless they’re getting real value?"

"If there’s real value add in terms of services they’re not getting today, a retail service provider would be able to charge more for that added value – and hence we would be able to have a slightly higher price on wholesale," Quigley said.

But for basic access services and voice, the NBN Co would need to deliver cost models that allowed retail providers deliver services at comparable costs available today.

The company was working on pricing models that had fixed and variable components. He said NBN Co was looked at fixed charges per user and was working on a variety of implementation models to see how to implement that.

The variable cost model he said would be based on a mix of “speed and quality of service attributes.

"This is a question of us building models, seeing how it looks, … (and) putting it in as part of the submission to the regulator to see how that fits," Quigley said.

Communications Minister Stephen Conroy told a media conference yesterday that government had always believed that estimates of end user pricing of $200 were “fanciful.”

"At the moment in the marketplace, Internode is selling 100 megabytes for $100 (and) iiNet are talking about that sort of pricing point," Senator Conroy said, adding that Optus research put a likely wholesale price at about $60.

"We've always believed that those sort of fanciful figures of $200 … were nothing more than political opposition for political opposition's sake," he said.

Further, he said entry-level pricing in the NBN regime would be comparable to the pricing today, when all additional costs around line rental, voice, access and data quotas were added.

But at a comparable price, users could expect better service.