NBN pricing unsustainable warns Telstra boss Andy Penn, 5G alternative compete on cost

The National Broadband Network has one chance to get its “unsustainable” pricing structure right or service providers will abandon it and point customers toward 5G networks instead, Telstra chief executive Andy Penn has warned.

The telco boss said the $50 billion government-backed NBN is creating an unnatural distortion in the market, resulting in Australia having the second most expensive wholesale broadband prices in the world.

“Wholesale broadband prices have more than doubled under the NBN and are set to go even higher,” Mr Penn said in a statement.

Australia’s NBN is among the most expensive in the world. (AAP)

“The consequence of this is that it is unprofitable for retail service providers to resell NBN at the current retail prices.”

Mr Penn said the NBN could be rendered worthless if wholesale pricing isn’t lowered, with retail providers forced to consider 5G as an alternative for customers.

“This ultimately means fewer customers will connect to the NBN and an increasing number of customers will switch away – undermining the potential social and economic benefits the investment in the network was designed to deliver,” he said.

In a submission to the NBN pricing review, Telstra has urged the network to abandon its volume-based pricing charge, called CVCs, to reduce prices on some NBN tier speeds and to give a wholesale price discount for targeted vulnerable and low-income customers.

Telstra CEO Andy Penn. (AAP)

By the end of the NBN migration period, Telstra expect the wholesale price for 50 Mbps and 100 Mbps services to cost $52-$55 and $73-$75, respectively.

Mr Penn said a $20 per month reduction “would bring NBN’s pricing closer to international benchmarks, and provide greater incentives for retail providers to compete in and grow the market for fixed broadband in Australia”.

Nine finance editor Ross Greenwood said Australia’s high wholesale prices were a direct result of the $50 billion spent building the NBN.

“The government hasn’t got the debt on its balance sheet because it believes it can sell the NBN in the future,” he told Today.

NBN Co said was considering feedback and will “re-engage with the industry and consult further in detail before finalising and announcing outcomes later in 2019”.

© Nine Digital Pty Ltd 2019

Source link Finance News Australia

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