Critical.
Authoritative.
Strategic.
Subscribe to CIO Magazine »

NBN wholesale pricing still up in the air

NBN Co continues negotiations with ACCC around wholesale pricing, but final outlook is still months away

Potential revenue inflow for the company charged with rolling out Labor’s National Broadband Network (NBN) remains up in the air as it continues to negotiate final wholesale pricing with the industry watchdog.

NBN Co chairman, Mike Quigley, told the Senate select committee on the NBN in April that negotiations with the Australian Competition and Consumer Commission (ACCC) over wholesale access pricing would begin in June.

"We believe the consultation process is important because we are currently preparing the documentation necessary to lodge a special access undertaking with the ACCC,” he said. “We plan to lodge the undertaking in June this year. As part of the ACCC undertaking we will have to establish our wholesale prices.”

When asked what the prices might look like by Liberal senator, Ian McDonald, Quigley took the question on notice.

The final answer from the company, provided to the senator this week, confirmed that “the overall national pricing structure is yet to be finalised and is part of our Special Access Undertaking (SAU) to the Australian Competition and Consumer Commission (ACCC).”

However, a spokesperson for the company confirmed with NBN Co that the undertaking was still under development and several months away from completion or finalisation.

“We are yet to lodge the undertaking, but when we do the ACCC will carry out an industry consultation process and seek submissions,” they said. “We expect the ACCC will take some time to give all material detailed consideration before making a determination, and therefore the process may take several months to complete.”

NBN Co has continued to insist that its wholesale pricing would be competitive to the current industry standard, with some analysts forecasting potential pricing of $20-30 per month for each user. Until a final pricing was determined, however, the wholesaler committed to providing the service to access seekers for $300 per premises.

This includes the four service providers - Internode, iiNet, iPrimus and Exetel - currently serving approximately 2,000 premises in the stage one sites of Midway point, Smithton and Scottsdale in Tasmania. If a wholesale price is not determined by the time the first mainland trial sites are launched early next year, access seekers there would also be able to provide NBN services to customers without paying a wholesale price.

“How is NBN Co ever going to pay interest on its borrowings, let alone pay a dividend on its $43 billion investment, if it receives no income?” Senator McDonald said in a statement, in response to NBN Co’s answer.

A minimal costing of the project was initially made available in the pre-election fiscal outlook released by the Labor party in July, but was notably missing from the Treasury costings of the party’s policies released by independent MP, Rob Oakeshott, this week.

Quigley recently indicated the project would require a peak government equity investment of $27 billion - $1 billion more than the figure estimated by consultants in the NBN Implementation Study - with additional debt funding of approximately $10 billion. He also pointed to potential operational revenue as a result of wholesale access the company would charge for over time, but indicated this would be a small portion of the total revenue and would likely be used to fund the rollout rather than pay back debts.

The government has already committed $662 million of equity to the project so far in both operational expenditure and capital expenditure, setting up the wholesaler and completing the first stage of rollouts in Tasmania, which was reported to have come five to ten per cent below its $37 million budget.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: ACCC, Australian Competition and Consumer Commission, etwork, iiNet, Internode, iPrimus, Midway, Primus, Quigley
References show all

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
Users posting comments agree to the CIO comments policy.
Login or register to link comments to your user profile, or you may also post a comment without being logged in.
Related Coverage
Related Whitepapers
Latest Stories
Community Comments
Tags: accc, Mike Quigley, national broadband network, NBN, National Broadband Network (NBN)
Latest Blog Posts
Whitepapers
  • A whitepaper on Cloud Security
    Articles include: The cloud security checklist; Creating a governance framework for Cloud Security; Hackers, like vendors are embracing the cloud. Are you?; Want government cloud? Rethink security! and more. Read this whitepaper.
    Learn more »
  • Printer Usage and Cost Management Strategies for the Australian Mid-market, an Unrealised Opportunity
    This whitepaper was commissioned to aid senior business and ICT decision makers of medium-sized government and corporate organisations, including marketing, finance, and technology executives to better understand the current use of print devices including copiers, printers and multi-function Page 19 Reproductions in whole or in part are prohibited. This whitepaper also provides insights into how current management practices can be improved to optimise investments and improve sustainability. Read on.
    Learn more »
  • 10 Essential Steps to Email Security
    Modern business is reliant on email. All organisations using email need to answer the following questions: How do we control spam volumes without the risk of trapping a business email? How do we prevent infections from email-borne viruses? How do we stop leakage of confidential information? Can we detect and stop exploitation from phishing attacks? How do we control brand damage from occurring due to employee misuse? How do we prevent inappropriate content from being circulated?
    Learn more »
All whitepapers
rhs_login_lockGet exclusive access to Invitation only events CIO, reports & analysis.
Recent comments