Vocus chief Kevin Russell wants government to rein in NBN

Vocus boss Kevin Russell has asked the Morrison government to pull NBN Co into line and curb its overzealous pursuit of business customers.

Vocus CEO Kevin Russell. Picture: Hollie Adams

Vocus boss Kevin Russell has asked the Morrison government to pull NBN Co into line and curb its overzealous pursuit of business customers.

According to Mr Russell, NBN Co’s current mode of operation is not in line with its designated role to connect areas that are underserved by existing telcos.

“NBN Co as a wholesaler is good for the country as it delivers connections to areas where there is no competition and Telstra is the only player.

“But there is a danger that NBN Co overbuilds and that’s exactly what’s happening — they are rolling fibre into areas where there is already plenty of fibre,” he told The Australian on Thursday.

“NBN Co is cherry-picking locations and not rolling out fibre where it’s really needed.

He added that NBN Co’s practice of cutting deals directly with end users, including signing confidentiality agreements and negotiating buying commitments with Vocus’s clients had to be reviewed.

“There are a number of areas that need to be looked at when it comes to NBN Co’s current selling behaviour in the enterprise market.”

According to Mr Russell, NBN Co’s behaviour has been aided by a lack of clear guidelines on what it can and cannot do as a wholesaler and it was time for the federal government to intervene with a new “statement of expectations”.

“Because in the absence of long-term policy objectives, NBN’s behaviour is being driven primarily by the need to fill a financial hole,” he said.

The policy vacuum, according to Mr Russell, is responsible for the behaviour that prompted the Australian Competition & Consumer Commission to issue a formal warning to NBN Co on Wednesday for favouring some telcos over others.

“The ACCC (has) issued its first formal warning to NBN for breaching its non-discrimination obligations, by offering ‘materially different commercial terms’ to RSPs for enterprise infrastructure upgrades,” Mr Russell said.

“This is a welcome development, but is it enough?”.

A spokesperson for the Minister for Communications, Cyber Safety and the Arts said NBN Co was obligated to stick to the current regulations.

“It’s important that NBN Co comply with the rules which require that it does not discriminate between its wholesale customers, the retail service providers.”

“That is what the government expects NBN Co to do, and the recent undertaking it has given the ACCC is a positive step which underlines NBN’s commitment to meeting its non-discrimination obligations.”

However, the Opposition’s communications spokesman, Michelle Rowland, said NBN Co’s actions in the enterprise market reflected the parlous economics of the project.

“It’s no secret that NBN is today overbuilding existing fibre with public capital in some areas.

“The 2016 Statement of Expectations issued by the Coalition does not make any mention of business,” she said.

“Why is it important for NBN to grow its enterprise revenue? Because the August Corporate Plan clearly shows that without it, rollout funding would increase beyond $51bn, and residential pricing would come under stress.”

Telstra last month labelled NBN Co’s intrusion into the business market “surprising”.

NBN Co’s push is a direct threat to Telstra’s margins, while Vocus’s concerns highlight a deeper anxiety in the sector from telcos that have fibre infrastructure that competes with the NBN.

NBN Co has rejected Vocus’s criticism. “Business customers have the choice whether to use alternative networks or to take advantage of the NBN where available,” a NBN spokesman added. “NBN Co has always provided services for businesses and our experience has shown that there is a positive market appeal for our offerings and the retail competition that we deliver,” the spokesman said.