The National Broadband Network won't deliver metro prices to regional Australia, Internode managing director Simon Hackett has said, but will bring regional prices to metro Australia.
Internode managing director Simon Hackett (Credit: Internode)
Internode has been a strong supporter of the NBN project from the beginning, and Hackett himself travelled up to Armidale on Wednesday for the launch of services on the mainland, with two of its customers in the area trialling NBN services for the retail service provider (RSP). However, Hackett believes that NBN Co has a fundamental flaw in its pricing model that will disadvantage smaller ISPs and will lead to higher pricing for large download plans.
Speaking with Business Spectator today, Hackett said that the government's desire to see the NBN make a return on the expected $27.5 billion investment will mean that rather than reducing the costs for internet in regional areas, metropolitan internet users will end up paying more to subsidise the rest.
"What it's turned into is the government merely being the guarantor of a massive amount of equity injection to NBN Co, but the government is expecting the money back, so it's not a subsidy, it's not a grant, it's a commercial investment needing a commercial return."
Hackett said that unless NBN Co charged more to RSPs than what they were paying today for their ADSL networks, the company wouldn't make a return on investment for the government. Instead of prices continually going down, internet plan prices would experience a bell curve that would peak when the government began getting back its investment in the NBN. Users wouldn't pay a lot more at entry level, but they would for higher quotas, according to Hackett.
He remains a supporter of the NBN and said he would still like to see an NBN with a "broken pricing model" rather than no NBN at all, but said other factors such as the $11 billion deal NBN Co is making with Telstra to lease its pits and ducts and decommission its copper network will put other RSPs at a disadvantage.