Vocus wants NBN to stick to its original wholesale remit

The telco is unimpressed with the government-owned, so-called wholesaler directly signing up customers.
Written by Chris Duckett, Contributor

Vocus CEO Kevin Russell has hit out at the National Broadband Network (NBN) for the tactics it has used to ramp up its number of enterprise customers, calling on the government to hand the national wholesaler a new statement of expectations.

Speaking at a CommsDay event in Melbourne, Russell 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."

Russell said the drive by NBN to enter into the enterprise market was driven by a short term need to shore up the government-owned entity's finances.

"It all comes down to this inconvenient truth: The value of the NBN is far less than what it cost to build, and reactive short-term steps are being taken to try to financially prop it up," he said.

The Vocus CEO added that since NBN has a rate of return of 3.2%, it does not need to charge as much as private fibre providers.

"If a commercial rate of return were to be applied, NBN could not justify many of its enterprise fibre investments," Russell said.

"Now this would not be an issue in underserved areas that lack competitive investment -- the areas that NBN should be focussing on.

"The problem is when NBN uses this uncommercial rate of return to compete in highly-competitive areas against private investors which have a far higher cost of capital."

Pointing to Vocus' offices in Melbourne, Russell criticised NBN for overbuilding in metropolitan areas, and said the building of infrastructure was already served by six fibre operators before NBN became the seventh.

In August, Telstra CEO Andy Penn said the telco was not expecting the NBN to divert capital into chasing enterprise customers, and that the impact of NBN gaining a piece of Telstra's enterprise lunch was now higher than planned.

Penn has since repeated the remark, but the NBN has been flagging its intention to offer business services since the start of the decade.

NBN was formally warned on Wednesday for providing special terms to Macquarie Telecom.

From an investigation into NBN's activities, the ACCC found that from at least January 2018, the company provided Macquarie Telecom with different commercial terms compared to other RSPs when it upgraded NBN infrastructure for business-grade services.

"The ACCC has concluded that NBN Co failed to comply with its non-discrimination obligations on a number of fronts," ACCC Chair Rod Sims said.

"These legal obligations were enacted to ensure that NBN Co does not distort competition in the market for retail NBN services, such as by favouring larger RSPs."

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