Thursday, 20 June 2019 10:50

NBN Co consultation will not solve basic wholesale pricing issue: Budde Featured

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Paul Budde: "NBN Co has made it increasingly more difficult for RSPs to buy products that fit that market at affordable prices." Paul Budde: "NBN Co has made it increasingly more difficult for RSPs to buy products that fit that market at affordable prices." Supplied

Well-known Australian telecommunications consultant Paul Budde says while the NBN Co's latest bid to hold a consultation on pricing is better than nothing, it is unlikely to resolve the fundamental issues that are posed by the wholesale pricing.

Responding to a query from iTWire, Budde said: "The fact that the issue is quite complex is a phenomenon that you see across utilities-based industries. Try to find the best mobile package or electricity price, fat chance."

NBN Co, the company rolling out Australia's national broadband network, announced on Thursday that it would be circulating a consultation paper exploring options for wholesale pricing. The big telcos are expected to be invited to participate.

Budde said the problem with NBN Co was that its network was costing double the price of what (former Prime Minister) Malcolm Turnbull estimated, while at the same the return on investment had remained the same.

"So the costs that NBN Co has to recoup are immense and the person who has to pay for this is the user (through the RSPs)," he pointed out.

"The RSPs know that customers will only pay so much for their broadband connection. Whatever complexity the companies (speeds, downloads, messaging, etc) build into their products to confuse customers, the end result is that if the price is unaffordable, customers won't buy it. The real problems are in that part of the market.

teresa corbin"Customers here are buying the lowest cost products, which also means the lowest speed packages, and NBN Co has made it increasingly more difficult for RSPs to buy products that fit that market at affordable prices.

"That is where the real problem is and it will be the key discussion point for RSPs. It is nice that the price for a 100Mbps products will be a bit cheaper but that is not where the problem is. Nevertheless [it is] good to see NBN Co opening the discussion."

The Australian Communications Consumer Action Network welcomed the NBN Co announcement.

In response to a query from iTWire, the organisation, which styles itself as Australia’s consumer voice on phone and Internet issues, said it had always strongly championed the need for affordable home broadband.

It said high-cost broadband services made accessing important education, employment, health and government services very difficult for communities.

“No Australian should be left offline simply because of the cost of a home broadband connection,” said ACCAN chief executive Teresa Corbin (above, right).

The organisation said it was pleased that NBN Co would be extending existing discounts for telcos until 30 June 2020.

"This extension should mean that NBN broadband providers are able to offer their customers a stable price as their wholesale costs will not be increasing before this date," it said.

“The continuity of these discounts is important for both telcos and consumers. If the prices that telcos pay are at risk of suddenly increasing, this would almost certainly mean higher telco bills for Aussie households,” Corbin said.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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