Vodafone sees challenges in NBN entry

Vodafone has admitted that it is tough for new entrants to launch services on the National Broadband Network (NBN), and has called on the government to publicise the improved competition on the $35.9 billion project.
Written by Josh Taylor, Contributor

Vodafone has admitted that it is tough for new entrants to launch services on the National Broadband Network (NBN), and has called on the government to publicise the improved competition on the $35.9 billion project.

Although Vodafone's global company is a major player in fixed-line markets in Europe, boasting some 8 million customers worldwide, Vodafone previously held off becoming a fixed-line internet service provider (ISP) in Australia due to the incumbency of Telstra as a vertically integrated wholesale provider, Vodafone's general manager of industry strategy and public policy Matthew Lobb told the joint parliamentary committee on the NBN in Sydney this morning.

"To be frank ... Australia has not been an attractive fixed-line market because of the dominance of Telstra," he said.

The situation is better under the NBN, he said, with the network's uniform pricing, the structural separation of Telstra and other industry reforms leading the mobile carrier to trial the NBN in Brunswick, Armidale and Willunga. The telco has approached existing Vodafone customers in those sites, and has provided NBN services across a range of speeds free of charge. Vodafone has been using this to test its systems and its other technologies, like FetchTV and femtocells.

Yet, while these trials are going well, Lobb said that Vodafone has no immediate plans to launch commercial services on the NBN, because the costs involved in such a launch means that it makes no commercial sense for the company to do so while the roll-out is in its early stages.

"Providing fixed-line services is quite a different beast [to mobile services]. We haven't commenced commercial launch yet, because the NBN footprint isn't at a scale where that makes sense commercially," he said.

He said that it is easier for ISPs with existing customer bases in fixed services to get those existing customers across to the NBN than it is for new entrants like Vodafone to lure those customers away.

Lobb said that to help with this problem, NBN Co should not only explain the nuts and bolts of how the NBN functions, but also explain to people that they might get a better deal if they shop around and don't just move onto the network with their existing provider, particularly to encourage competition against Telstra in regional Australia, where the company dominates.

"They are going to be a formidable competitor, and what we want to make sure is that that competition is undertaken fairly," he said.

"One of the messages is: make informed choices, don't just consider your current supplier," he said. "It's not just more of the same — migrate across to fibre but think about new entrants."

There needs to be more oversight of the competition from the Australian Competition and Consumer Commission (ACCC), he said, particularly around how Telstra and Optus use their $11 billion and $800 million payments, respectively, to lure customers onto their services.

Lobb said broadly that the commercial prices from other providers on the NBN so far have been much the same as are available on ADSL, but he believes that more competitive prices will be achieved by bundling other products with the NBN service.

"The challenge is what is going to be the Vodafone bundle. Watch this space," he said.

Vodafone is hoping that it will be able to leverage the NBN fibre roll-out to improve capacity on its mobile network by hooking up the fibre to its base stations. At the same time as the NBN is rolling out, Vodafone is overhauling its mobile network by installing Huawei SingleRAN equipment in those base stations.

The government has banned the Chinese networking giant from tendering for NBN work, and Lobb said that Vodafone doesn't use Huawei technology for its core network infrastructure.

"We use Huawei for a fair way out of our network. We don't use Huawei for the core of our network," he said.

"It's delivering good results for us. The important thing to understand is security of network is a vital part of any telco's business. It's the key thing that people must trust, so both consumers and governments must trust our networks.

Lobb said that Vodafone has a strong interest in working with the government and vendors to ensure that the right security protections are in place.

The Huawei ban is likely to be discussed again later in the day with NBN Co, Telstra and the ACCC all set to front the committee.

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