According to MNF's Sugo, the inaction by the Turnbull Government threatens the feasibility of the NBN business model – and could affect the viability of the entire telco industry.
Sugo says the NBN wholesale pricing model business case is currently usage-based and relies on reaching an “unrealistic” target of 80% of all Australian households having an active NBN service by 2020 to generate sufficient revenue to repay the investment of building the network.
Sugo claims shortfalls in activation numbers and resulting revenue will need to be recouped via an increase in retail prices making it unattractive for providers to sell or for consumers to buy.
“In order to reach its targets, NBN has to be the ‘number one choice’ for data services for consumers and be available at a viable price point for service providers of all sizes to resell. As it stands, this is not going to be realistic.”
Sugo says that a fair pricing model would allow middle players to step up and effectively compete in the market, driving NBN uptake and balancing out the challenge of the NBN bypass services. “Australia needs a healthy, competitive telecommunications industry for this ambitious NBN build to succeed.”