NBN sees city pay rural prices: Hackett

NBN sees city pay rural prices: Hackett

Summary: 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.

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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.

Simon Hackett

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.

Topics: NBN, Broadband, Telcos, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

29 comments
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  • Hey fizz boy what say you and goose to this news, we all will get to pay higher prices.
    Knowledge Expert
  • For a long time Telstra opponents have called for a level playing field with Telstra being split, wholesale from retail, and the allowance of competition to be the decider of customer choice.

    The Labor Government, under direction of Senator Conroy, has achieved this but now I detect that perhaps Simon Hackett still intends to pursue a course that would see true competition principal ignored and those who provide excellent service and technical acceptability be unfairly restricted to assist lessor competitors.

    What did Simon mean when he stated in his presented debate that Telstra would have advantage with the NBN Co/Telstra deal? Surely the only advantage Telstra would have is the money received for its assets which would be expected in any normal business transaction.

    The old days where Telstra competitors got unfair rules and regulation placed on Telstra because of Telstra integration are finished. Telstra has been split and it is a level playing field so please let the devious whinging finish and competition begin.
    sydneyla
  • In layman's terms, I'm assuming that Simon is assuming, because Telstra will migrate up to 9 million (I believe) customers, they may receive a "bulk" discount on access fees from NBNCo.

    By the way they weren't unfair rules on Telstra (only through the eyes of NWAT brainwashed sheep/stakeholders such as your self)...

    Ask any other ISP/comms company would you like to access your competitors network (not a completely separate government owned network, like the NBN) or would you like your own network, to make $10's of B's in profit from, c/- the government, as Telstra did...?

    I bet I know what they'd say, including Telstra!
    Rizz-cd230
  • You share the wealth from the rural areas and now you share the costs. Deal with it.
    bobtech34
    • Yes agreed! I also remember donating money to help those in the country in the not so distant past
      Knowledge Expert
  • You share the wealth from the rural areas and now you share the costs. Deal with it.
    bobtech34
    • Most succinctly put Bob34... as one from the city I couldn't agree with you more...!
      Rizz-cd230
      • Fizzy, you are telling little stories again. Just a short while ago you stated you come from the country. Cannot have it bothways!
        Knowledge Expert
  • Post you proof...LOL.

    Never did say it, cause it aint so...LIAR.

    Your desperation is becoming "even more" pitiful. fa, oops sorry, Visionary, oh whoever you are at the moment..

    Back to the basement gimp...!
    Rizz-cd230
    • Fizzy, dont be so defensive about your origins. I have great respect for those born and breed in the country.
      Now then, back to you.

      I need to repeat the situation to you. But I will do i t s l o w ly b e c a u s e y o u a r e c l e a r l y "R e a l l y S l o w".
      Fizzy, no one like you! Go away! Get off our forum! go back under the fridge, have a nibble on that nice tasting treat that you will find there!
      Knowledge Expert
  • From the actual interview
    http://www.businessspectator.com.au/bs.nsf/Article/NBNinternodeSimon-Hackettbroadband-Telstra-ADSL2-pd20110518-GXVWQ?OpenDocument

    RG: But what you’re saying is if they leave their policy as now stated it will slow the growth of broadband in Australia.

    SH: Yes.

    RG: That's the exact reverse of what was expected.

    SH: Yes. It’ll increase accessibility at the entry level, but at the moment one of the cost components is a thing called the CVC. And the point about it is it’s a cost component that’s linearly related to how much data you move down the network, and that factor happens to be $20 per megabit plus GST in the NBN Co’s model. The point is that the effective equivalent price we pay on our own DSL networks today is about $1 to $2 a megabit, and that factor of 10 to 20 difference means that if you wind up needing 10 times as much data to enter the video generation, we can’t discount it over the same discount curve as we’ve done over the last 20 years. So that will actually serve to suppress the take-up of high-capacity applications on the NBN in the first instance.

    NBNCo won't increase internet prices my ****
    deteego
    • Where is NBNCo increasing your prices deteego? The extra cost suggested above is coming from increased personal use, and your agreement with the ISP, not NBNCo.

      The way I'm reading the above is that there is an expected surge forward in usage, before things plateau out for a while. Which should be expected.

      Same thing happened when as a social beast we switched from dialup to ADSL - usage went up, people paid more for the higher limit. Over time, pricing models settled back down to the point we have now.

      NBN wont be any different. It will allow a bigger surge in use than any upgrade before it, and how the community uses it will inevitably change how interactive we as a community become.

      In the short term, that interest and use naturally leads to higher prices as outdated pricing models catch up. In the long term, it will level out again.
      Gav70
  • So you have a part time job with Business Spectator selling subscriptions... good for you!
    Rizz-cd230
    • So according to you, I have 4 working jobs now, which include

      1. Working for PIPE
      2. Working for Telstra
      3. Working for the Liberal Party
      and now
      4. Working for Business Spectator

      I must be some superhuman
      deteego
      • Superhuman...LOL! No t quite, I was thinking of a different 2 syllable word...

        So lets play charades...

        Two syllables

        First syllable... starts with D

        Second syllable... starts with H...
        Rizz-cd230
  • Simon is right,

    The punter at Armidale wants fibre. 90% 'opt-in', but how many punters will actually want it in the end?

    To provide 'smart wiring' in a house to utilise the service properly costs $3000 - $5000 in a new house (greenfields). It will cost $5000-$10000k in an already built house to retrofit (brownfields).

    Costing for service will go up, and will be around double (which the Big T had already worked out). And the true costs of services will have to be tripled, with the real cost of building the NBN ($80-$100 billion).

    Again, I love the way the 'techno head' calls it. As always' Talk Big, Pay Cheap' and moving from their '$25 Exetel plans' will make them whinge like no other. In addition, they represent such a small percentage of users (10-15%), they think the world and NBN is built around them.

    Love to see how much of these Armidale punters take it up over time, and the spin NBN and Conroy will have to give on it with such low take up rates.....
    Theguy-bbb4a
    • Theguy.

      So how many do you think will opt for your overkill FUD & "provide 'smart wiring' in a house" when a wireless router or a powerline adapter will suffice for most at under $100?
      grump3
    • Do you have a source for your $5,000-$10,000 cost? Maybe you have forgotten articles such as this: http://www.zdnet.com.au/advance-australian-fair-339306784.htm. Even The Australia backed down from their $7000/house claim to up to $400 per room.
      anonymous
  • This is true. FTTH shouldn't be rolled out to the country first. It should be rolled out to the city first where the money is. The city shouldn't also have to pay for the country to gain access.
    evilsync
    • I'll agree with your statement provided you also agree to never attempting to communicate with anyone outside of your already well-serviced cities.
      grump3