Telstra chairman blasts NBN as consumer watchdog queries basic tier pricing

The chairman of Telstra says the internet in Australia would be faster and cheaper if the $50 billion NBN had never been built.

The chairman of Telstra has savaged the National Broadband Network as a costly mistake.

John Mullen told shareholders at Telstra’s annual general meeting on Tuesday that Australians could have enjoyed 100 megabit-per-second internet speeds even if the NBN had never been built.

“It is always easier to comment with the benefit of hindsight, but it is my view that over the last 10 years private sector competition between strong players such as Telstra, Optus, TPG and others was always going to build 100Mbps broadband access and speed to the majority of the population of Australia, in an ongoing competitive landscape and at no cost whatsoever to the taxpayer,” Mr Mullen said, according to IT News.

“Governments could then have decided how much subsidy they were willing to provide the industry to extend this coverage to regional and rural areas where private sector economics were unattractive.

“This would have been at a fraction of the cost of today’s NBN.

“Instead, however, in the NBN we have created a state-owned monopoly that is going to cost the country more than $50 billion.”

Mr Mullen also called for the wholesale prices Telstra and other telcos pay to NBN Co in order to resell network access to their customers to be dropped.

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Telstra Chairman John Mullen addressed Telstra's annual general meeting at the Melbourne Convention and Exhibition Centre on Tuesday.

“Australia already has some of the highest wholesale broadband pricing in the world, and if this trend continues, over time most resellers of the NBN will withdraw or go broke,” Mr Mullen said.

“The downside of this in turn will be fewer service providers and ultimately higher broadband prices to the consumer.”

It comes a day after the Australian Competition and Consumer Commission announced an inquiry into the lowest tier NBN plans.

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The basic NBN plans offer download speeds up to 12Mbps, with up to 1Mbps upload speeds.

These speeds are roughly equivalent to what you’d experience on an ADSL connection, but they don’t come at ADSL prices.

The Australian Competition and Consumer Commission has now announced an inquiry into whether the prices NBN Co charges to telcos to access the network need to be changed for basic plans to allow a smoother transition for customers joining the network who can’t afford or don’t want a higher speeds.

One of these in your street means the clock is ticking to switch if you haven’t already.

Customers have 18 months to switch to the NBN once it becomes available in their area.

“We have concerns that NBN Co’s wholesale pricing has resulted in unfair outcomes for those consumers who have no need for, or do not want, higher speed plans,” ACCC chairman Rod Sims said.

“Most consumers have no choice but to migrate to the NBN if they want to keep their home service active, but are at risk of not being able to obtain a comparable NBN service at a similar price to their ADSL service.”

The ACCC raised concerns about basic speed wholesale pricing earlier this year, after changes to wholesale pricing prompted many telcos to drop their 12Mbps plans entirely.

Earlier this month, NBN Co introduced a modified version of the entry-level bundle, which an NBN spokesperson said “provides retail service providers (RSPs) with the flexibility to develop affordable 12/1 broadband plans for a similar price to legacy products”.

But the ACCC is also concerned about the company’s use of discounts to adjust wholesale pricing, which can be withdrawn ahead of a notice period that NBN Co sets itself.

The commission expressed concern this didn’t provide telcos with enough stability.

“This lack of certainty creates unnecessary risks that may ultimately be passed on to consumers, who may face higher prices and reduced quality and product offerings as a result,” Mr Sims said.

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An NBN spokesperson said the company would publish a “rolling two-year road map” of future pricing for all wholesale speed tiers to provide telcos and customers greater security.

The inquiry announcement marks the third consecutive week the ACCC has set its sights on the company in charge of delivering Australia’s national broadband network.

When asked about the consumer watchdog’s recent heightened interest, an NBN spokesperson said the company remains “committed to working with the industry to improve customer experience and service, and will always work constructively with the ACCC to help achieve this”.

“We welcome any additional options the ACCC may identify through its Access Pricing Inquiry to promote competition and the interests of customers, while allowing NBN Co the opportunity to grow its revenues and reinvest in the network.”

— with AAP

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