Enterprise customers allow for fibre to go deeper into NBN: Rue

Telcos shouldn't be surprised that NBN is moving into business plans, as it's been there for a long time, NBN CEO Stephen Rue has said.
Written by Chris Duckett, Contributor
Image: Chris Duckett/ZDNet

The company responsible for deploying the National Broadband Network (NBN) across Australia has hit back at criticisms of its targeting of business customers, stating that the move is both unsurprising and has put more fibre deeper into the network.

"From the original implementation study and in early corporate plans and statements of expectations, it was very clear that NBN will be offering services that retailers could provide to small, medium, and large businesses. We've never hidden this and indeed announced last year our intent to generate a billion dollars in revenue from business," Rue told Senate Estimates on Tuesday night.

"Yet, it seems to have been a surprise to some and arguments have been made as to why we should limit our entry in the enterprise space."

Rue stated that NBN's internal rate of return of 3.2% is not used for its business deals, which he said are "entirely commercial" and require a return within the first five years if a deal is to proceed.

Over the past few months, Telstra CEO Andy Penn has consistently stated the telco was not expecting for NBN to divert capital into chasing business customers, and that the impact of NBN gaining a piece of Telstra's enterprise lunch has been higher than planned.

In regards to its targeting of business customers, Rue also said deals like the one inked with Australia Post would allow for fibre to be pulled deeper into the network.

"When NBN connects post offices all over the country to fibre, that fibre can also be used to connect other premises over time," he said. "This drives savings and cost reductions over many years."

See also: Snake and ladders as Australian broadband realigns towards NBN

Under questioning, NBN chief customer officer of business Paul Tyler said the company does not break out business average revenue per user because enterprise customers are spread over multiple sites, unlike residential customers.

Tyler added a cross-subsidy existed between NBN's business customers and the rest of the network, which he said would allow it to meet its "broader social obligations".

NBN defended its use of "industry engagement consultants", with Tyler saying the team educates the market about options to upgrade their connections, and that the company has contacted hundreds of businesses.

Earlier this month, Vocus CEO Kevin Russell hit out at NBN for directly signing up customers, and said the government should make it so that NBN cannot enter into tenders or contracts with end-users, cannot negotiate buying commitments or terms of service with customers, cannot sign confidentiality agreements with users, nor recommend retailers to enterprise customers.

"NBN should be a good thing for the Australian Enterprise market -- but only if it operates within its original remit as a wholesale-only, transparent, and non-discriminatory operator," Russell said.

"Right now, NBN's behaviour in the market is in danger of undermining and penalising those who have invested and, want to invest, to support infrastructure competition."

Speaking on Tuesday night, Tyler said NBN only enters into direct contracts to upgrade physical infrastructure, which was different to offering carriage services, something he said NBN would never enter into.

Tyler added there could be situations where enterprise customers contact both a retailer and NBN to upgrade their connection and receives a pair of quotes back.

"I can't control which one of those quotes they will choose to take up," he said.

Responding to its recent formal warning from the ACCC for providing special terms to Macquarie Telecom, NBN said the consumer watchdog found there was no commercial harm because the pricing information concerned was released to the wider market "well in advance" of the product being available.

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