NBN Co’s continued bid to appease regulators, retailers and consumer organisations means its financial worries are far from over, says independent telecommunications consultant Paul Budde.
His comments came after the company posted its results for the six months from June to December 2021 on Thursday, showing an increase in average revenue per user of $1 to $46, although red ink still remains on its balance sheet, at a loss of $ 857 million. for a period of six months.
Budde pointed out that in search of more subscribers to increase its revenue, the company announced that it would begin rolling out its latest discount campaigns in April under the names Step Up and Light Up.
The offers in question are:
- Upgrade from 12Mbps to 25Mbps and receive an $8 rebate;
- Upgrade from 12Mbps to 50Mbps, or the 25-50 tier for FttN/FttB and get a $10 rebate;
- Upgrade from 25Mbps to 50Mbps or from fixed wireless to Wireless Plus and get a $2 rebate; and
- In May, a second package will be made available for upgrades to 100/40 services.
Outlining the issues NBN Co is facing, Budde said: “The company is plagued by constant requests from its regulators, retailers and consumer organisations to develop better pricing models
“The ACCC is still investigating NBN Co’s complex wholesale charging system. Consumer organisations have also made it a political issue, arguing that people who can’t afford broadband should still get it as it is essential for their social and economic existence.”
He said it was unlikely that anyone would challenge the company’s argument that it should be allowed to build a financially viable business.
“However, the issue is that its cost base is far too high and that retailers and consumers are paying the price for the political footballing with the NBN Co, which has resulted in costs much higher than were originally envisaged by the then Minister for Communication Malcolm Turnbull,” Budde said.
“He [Turnbull] had mentioned costings between $25 billion and $29.5 billion and the current costs are edging towards the $70 billion mark.”
He pointed out that NBN Co offered rebates from time to time to placate RSPs. “This allowed them to maintain their overall pricing structure with some drip feeds to the market,” Budde added.
“The reason why NBN Co keeps dragging its feet on this issue is that they need these higher prices for their financial viability.
“The discounts were appreciated during the Covid pandemic, but it was not just charity as the pandemic has also seen that customers were forced to pay for higher quality plans, especially when working from home and online education led to significant increases in the demand for broadband capacity within households.”
Budde said the ACCC released figures showing that 58% of NBN users were on connections with download speeds of 50 Mbps, only 19.2% were using products with download speeds of 100 Mbps or more. .
But 10.4% of users had services at 12 Mbps and 12.4% at 25 Mbps, showing that many did not have enough bandwidth to cope.
“During my radio interviews with stations in regional and country areas, time and time again I hear mayors of towns, farmers and ordinary users complaining about the quality of the service,” he said.
“…fixed-wireless and satellite services are continuing to be a major problem area as are – be it at increasingly smaller numbers – the poor performing FttN services.
“Lack of stable mobile access remains the other major issue that plagues regional and rural communities across the country. Mobile access remains a hit and miss outside metro Australia.”
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