NBN is too expensive at $80 retail average

Summary:Malcolm Turnbull says the NBN is offering no cut-price nirvana. He's right — the average wholesale price of $52 could translate to a retail price of around $80 to $85.

Malcolm Turnbull says the NBN is offering no cut-price nirvana. He's right — the average wholesale price of $52 could translate to a retail price of around $80 to $85.

An average price of $52 seems particularly high when we factor in all the people on the Telstra copper network who only want a phone service. As Telstra decommissions its copper network, where do all these people go? Will retail service providers be able to offer the service they want at a price that they're prepared to pay, even at the entry-level wholesale price of $24 or $25? The added cost of supporting the power supply certainly won't help.

Fortunately the business case manages to avoid the issue of low-value customers by assuming that one third of all premises passed will never connect to the NBN. That means there will be a lot of Telstra copper customers who disappear off the radar.

We'll also discuss the impact of the revised number of interconnect points on the NBN. Internode's CEO Simon Hackett says it will reduce competition in the market and risks the telco industry becoming another carnation of the banking industry, where a few small players dominate.

Listen in to the last Twisted Wire of 2010, as I delve into the details of the NBN Corporate Plan released on Monday. Helping with the dissection are IBRS senior analyst Guy Cranswick and economist (and former ACCC commissioner) Stephen King.

All that, plus Stephen Conroy introduces the word "ongoingly" into the English language.

Twisted Wire will be back on 6 January. Have a great Christmas.

Running time: 29 minutes 45 seconds

Carousel image credit: Australia dollars by InfoMoto, CC BY-SA 2.0)

Topics: NBN, Broadband, Government : AU

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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