At the 2016 Tech Leaders Forum, MyNetFone co-founder and chief executive, Rene Sugo, called for the National Broadband Network (NBN) to level the market for mid-size telcos in Australia.
He said the current model favours the top end of the telco industry, yet the big telcos such as Optus, Telstra, Vodafone Australia and TPG, have more attractive bypass alternatives to sell to their consumers.
In order to make the NBN model more viable for second-tier players, Sugo suggested a reduction of the required 121 points of interconnect (POIs), the removal of the connectivity virtual circuit (CVC) usage-based model and proposed the government should write off part of the network build cost to ensure the NBN retail pricing does not snowball.
“The NBN wholesale pricing model business case is usage-based and relies on reaching a certain percentage of service activations to generate sufficient revenue to repay the investment of building the network. In order to reach this activation target, 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.”
Sugo also raised the concern that the mid-size players will be in danger of having too low margins and too few customers. He said mobile data could become cheaper than the NBN and in that case, customers would go ‘mobile only.’
As a result, will anyone be left with a genuine interest in selling NBN services?
“As retail prices rise, NBN will become less and less attractive to consumers, driving them more to bypass services, further decreasing NBN uptake, leading to further NBN cost increases in a vicious cycle. The end result - the NBN business case falls short of recovering its massive build cost,” he continued.