NBN pricing remains too high, too complex, and uncertain: Telstra

Quite a bit of works remains on the pricing of the National Broadband Network, Telstra CEO Andy Penn has said.
Written by Chris Duckett, Contributor

Telstra CEO Andy Penn has said the changes introduced by NBN on Monday to its wholesale pricing will not have an economic impact on his company.

Speaking at Telstra's investor day, Penn said since the company responsible for deploying the National Broadband Network (NBN) across Australia has not changed its average revenue per user (ARPU) outlook, nothing will change.

"Their outlook on ARPU hasn't changed, and given that their ARPU is our cost, by definition, ergo it follows there is no upside from that," Penn said.

The Telstra CEO said the telco's position on NBN pricing remains the same following NBN announcing on Monday it would add 100/20, 250/25, and 1000/50Mbps speed tiers, allow retailers to pool unused CVC on a national basis, and create an allowance for TCP/IP headers above its layer 2 remit.

"Unfortunately they are creating more complexity into the system ... they've introduced 100/20Mbps plan, we've got customers currently on 100/40Mbps, we're now going to have to build a new product, think about how we migrate customers, complexity for customers in terms of why some are on 100/40Mbps and 100/20Mbps," Penn said.

"Our position remains fundamentally the same, the prices are too high, the structure is too complex, the CVC just adds uncertainty, and I think it is going to continue to hold back the retail fixed broadband market until we see more fundamental change there."

The introduction of the 1000/50Mbps speed tier drew the ire of former NBN board member and Internode founder Simon Hackett.

"1000/50 seems insane. TCP transfers are rare limited by the throughout of ACKs in the other direction. Think in terms of a circa 8:1 ratio," Hackett tweeted.

"So that's likely going to be limited in the real world to circa 400mb/s and when at that limit any other upload will be starved out. Nuts."

Penn added that NBN should introduce a voice-only service, rather than having its 12/1Mbps plan as its entry-level tier.

"The price has been reduced on the 12/1 plan, but the wholesale price still comes up at about AU$30, which does not really facilitate an attractive voice only solution," Penn said.

"There is some irony in that the area where we've seen the most improvement in NBN wholesale pricing is in 12/1 plans. Which, in a sense, creates a bit of a perverse incentive for customers to go the slowest possible speeds when the whole point of the NBN is to actually try and improve speeds.

"In fairness to NBN, they've also brought the price down at the really fast speeds as well, although there's still ongoing challenges with the ability of most of the infrastructure to facilitate those higher speeds as well."

Earlier in the day, Telstra said a quarter of its Android phones sold since July are 5G capable, and announced it was extending the reach of its 5G network with 15 additional regional cities in Australia's eastern states having coverage switched on.

"In terms of our dense population coverage, proportion of devices that we're selling that are 5G capable, we are probably second only to Korea," Penn said.

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