|NBN Co boss suggests levy for TPG
|Company reports $1.1 billion loss.
NBN Co’s new CEO Bill Morrow has suggested the Federal Government apply a levy onto NBN infrastructure competitors like TPG in order to ensure a sustainable economic model in the provision of broadband services to rural customers.
Morrow this morning gave an insight into the company’s upcoming submission to the Vertigan review, revealing it would suggest either a levy on infrastructure providers competing with the NBN or a tax subsidy to support the rollout of the NBN to rural and regional areas.
“The current structure today cannot support competition in the infrastructure level without saying ‘I’m going to allow it in a free marketplace and I’ll use a tax subsidy for rural areas to keep costs down or [a levy for infrastructure providers]',” Morrow said.
“We don’t have a preference either way, we’re relaxed about it, all we can do it point out that things will change from the original intent of NBN.”
He said TPG’s efforts to build a competing fibre-to-the-basement network, cherry picking off lucrative metropolitan areas for connectivity, would push the overall cost of building the national broadband network up.
“If you’re still going to build the regional areas - which people like TPG aren’t going to do - it means we have to get more subsidies from the metropolitan areas we are going into, which means we have to charge in them greater, and then you get a non-sustainable economic model,” Morrow said.
“If there is infrastructure competition, we need to consider whether the Government imposes a cross-subsidy component on the infrastructure competition. So if TPG goes into a certain area, they can implement whatever cost model they want, but there [should be] a levy to be able to partly offset the cost of getting a broadband solution to rural areas.
“That way NBN Co can still build in the area and the economic model stays intact. Everyone can get broadband, and there’s still competition.”
TPG last year revealed plans to roll out fibre-to-the-basements of an extra 500,000 apartments across metropolitan Sydney and Melbourne, using loopholes in anti-cherry picking legislation governing the NBN. It has started construction in a number of sites across NSW, Victoria and Brisbane, and is live trialling the service.
Morrow’s comments come as the company reported a $1.1 billion operating loss for the last nine months - a result Morrow admitted signalled NBN Co's need to lift its game.
The operating loss accompanied revenue of just $69.8 million for the nine months ended March 31, according to unaudited quarterly results released today.
Most of the company’s capital expenditure went towards expanding the national broadband network. It reported life to date increases to CapEx and OpEx, now $4.9 billion and $2.4 billion respectively.
It claimed a quarterly increase of 27 percent of premises with an active NBN service, now sitting at 166,642, and a 23 percent increase in passed fixed line and fixed wireless premises, standing at 512, 659 premises as at the end of March.
It is continuing its efforts to attack service class zero orders, admitting one third - or 94,883 - of existing connected homes and businesses are unable to access services despite being passed by fibre.
NBN Co outgoing chief operating officer Gred Adcock said the company is combating the issue by instructing contractors to install lead-ins and connection boxes to premises while fibre is being laid in the street, which had previously been done separately.
Reducing a backlog of held service orders has been a priority for NBN Co since the start of the year. It beefed up its field force to reduce the number of NBN service orders that had become held due to technical issues and contractors missing appointments.
"It is essential we tackle what has effectively become a brand issue," Adcock said.
“There are a range of issues we need to address. The primary focus for management has been on building the network rather than connecting families and businesses,” Morrow said.
“We need to do both and we need to do them better.”
Morrow took the top job two weeks ago and is already attempting organisational reform. Last week he announced CTO Gary McLaren, CFO Robin Payne and head of corporate services Kevin Brown would depart the company.
|ADSL2+ in Coleraine
Senator the Hon. Stephen Conroy
For a starter it's disappointing that ADSL 2 is not available in
Coleraine in country SW Victoria though it does have ADSL 1(download 0.43
Mbps upload 0.30 Mbps).
Country people are not second class Australian citizens and should not be
treated as such! Its offensive to country people that the Federal
Governments NBN is being implemented at huge expense to us as taxpayers
without offering and funding an acceptable, affordable service that allows
any business like ours to compete on a national stage today.
Without this updated technology it's almost impossible to receive emails
with content like price lists as the speed (download 0.43 Mbps upload 0.30
Mbps) is so slow and frustrating that it is hampering the development of
regional business like ours.
Towns like Coleraine, Balmoral, Dunkeld, Cavendish and Penshurst are smaller
communities without ADSL 2 who surround a bigger Hamilton city within the
Southern Grampians Shire so we demand a telecommunication service that is
fair and affordable for the Australian citizens who live and work in the
greater regional areas of Australia. Justifiably Hamilton as a city has ADSL
2+ which is even faster than ADSL 2 so now it's about time the politicians
started to demand and act by offering equality and opportunity to everyone
concerned now and not in 5 or 10 years time with the NBN rollout.
Australian businesses and families in even smaller communities and on farms
living and working outside towns like these have only access to "dialup" or
satellite at unacceptable quality and usually are to costly to incorporate
into the family budget to utilise fully in our modern business world today .
Senator, as our federal representative I know this is a Telstra issue but
you and I are major shareholders of Telstra through the governments 10.9%
shareholding of the company so I'm expressing our country people's concern
and frustration with the basic poor service within our region to you. Please
ask Telstra to upgrade our Coleraine and surrounding towns telephone
exchanges mentioned here to accommodate the ADSL 2 technology. It would be a
huge boost to the regions economy.
The 36 billion dollars (28 billion of that will be paid for by us the
taxpayers) that is budgeted for by the Federal Government to implement NBN
will not be spent on these townships and communities using fibre to the
premises as they are "communities" with less than 1000 people. The NBN plan
for Coleraine has the optic cable passing right on through the town without
stopping to a larger more "relevant" town or community in Casterton along
the superhighway- can you believe that! The technology will literally be
going past our door and we won't be connected. When will the "Big City"
decision makers in our federal parliament balance the availability,
accessibility and affordability of technology to smaller community centres
for their citizens in these communities? We pay our taxes and contribute to
the welfare and betterment of our country also, so we expect and demand to
be included in the NBN like the other 93% of Australian premises who will be
connected with speeds of 100 Mbps without the extra ongoing costs and
charges that we are being currently paying.
To quote the NBN website:-
"The NBN will connect 93 per cent of premises with fibre to the premises
technology providing speeds of up to 100 megabits per second (Mbps). The
remaining premises will be connected via next-generation fixed wireless and
satellite services that deliver peak speeds of at least 12 Mbps."
If the communities listed above, and like many others who are also classed
as "to difficult, to expensive" drop into the 7% of premises (which probably
represent over 70% of the Australian area) that are not connected with fibre
to the premises or fixed wireless, THEN please CONNECT US WITH THE NEXT
GENERATION FIXED WIRELESS AND SATELLITE SERVICES THAT DELIVER SPEEDS OF AT
LEAST 12 Mbps NOW! Or at the very least urgently get the technology into
space so that the people who will miss out on the big deal won't have to
wait ten years to see a result.
As I said running a business on a download speed of 0.43 Mbps today is just
not on for country people, it's insulting.
If the Government can budget and spend huge amounts of money on the NBN they
must at the very least guarantee the ongoing costs for its "disadvantaged"
citizens to use the substandard wireless and satellite technology to reflect
the rates that our city cousins currently pay, or will pay now or in the
future for a superior optic fibre service.
|The NBN...Telstra can’t lose now!
A friend of ours was at the Communications Alliance and CommsDay Awards 2010 held recently.
Everyone in the industry was there including Senator Lundy and Communications Minister Stephen Conroy. Our friend was talking to a senior member of a decent sized Telco. This exec had 20+ years of industry experience. Everyone was talking the NBN and this conversation was no different. This exec had a very interesting theory on Telstra’s NBN strategy. Now that Telstra has a nice piece of change from the Heads of Agreement they are protected from the NBN to a degree. In the agreement there is no mention that Telstra can’t compete with the NBN. One would think that now Telstra has a agreement in place why would they want to compete?
Here’s the theory put forth by the exec. With Telstra’s track record and policies of the past, it actually makes sense. Before we get into that, it should be pointed out Telstra has no interest in the NBN succeeding. They sit on a monopoly and companies that have monopolies want nothing to do with anything that interferes with that. Even if it means the betterment of the country. Then again if you or I owned Telstra, we’d probably feel the same way. We’ll get to that in a minute.
So here we go…we are building the NBN and everything is great. Taxpayer money flow like a river after the dam broke. Our exec point out one asset Telstra has that everyone’s overlooked. Data. The bottom line is the NBNco is a business that needs to give a return. In the Telco business the 80/20 rule applies also. There is a large, very profitable base of customers in Australia and Telstra knows where every single one is. They also know where the un-profitable customers are. With the NBN, Telstra can still lay fibre themselves. At a cost but, they don’t have to re-wire all of Australia. If 40 billion is the price tag to do 90% of Australia. 5 billion seems a respectable guess to re-wire say…the CBDs or business parks, where the most profitable customers are?
A interesting side note: Austar’s parent company American Chairmen was in Australia a few months ago. This is someone who runs 16+ cable businesses around that offer voice and data all around the world. So he’d have some interesting insight. When asked about the NBN he said he didn’t understand the need for such a large amount to be spent? He said the Telstra could upgrade their cable footprint to 100 Mbps for 200 million. I’m not sure of the exact percentage but Telstra’s cable passes 30-40% of Australian homes.
Ok, it’s 2018 and you run a small office with 40 staff. A NBN reseller knocks on the door (Remember, the NBNco will just wholesale, no retail) and says you can get a 100Mbps connect for $150. (We aren’t even going to talk about the $5,000 a month they spend on their phone bill.) This replaces your $400 SHDSL connection. Wow, you run to cancel your expensive Telstra account. Then Telstra says… we put fibre in your street last month. We can do the same deal for $140 plus give you $2000 credit on your phone bill on a 24 month plan for being a long term customer.
You get the idea. Telstra may sit back and let the NBNco re-wire Australia while they cherry pick the profitable areas. All the while getting paid for the NBN taking over the un-profitable areas. It’s a clever strategy and it’s the way I would play it, if I owned Telstra. What would you do if you owned Telstra?