Vocus adds its voice to telcos critical of NBN business model

The chorus of disgruntled telcos asking for an end to NBN Co’s onerous wholesale prices is getting louder.

Vocus CEO Kevin Russell at North Sydney. Picture: Hollie Adams

The chorus of disgruntled telcos asking for an end to NBN Co’s onerous wholesale prices is getting louder, with Vocus the latest to call for the current model to be ditched.

NBN Co is in talks with telcos on giving them a better deal on wholesale prices, but Vocus says in its submission the company needs to go back to square one on charges.

According to Vocus boss Kevin Russell, NBN Co is exploiting its monopoly position to support its own financial requirements rather than the needs of consumers.

“To make broadband affordable for consumers, NBN needs to abolish the CVC download tax, offer four flat-rate speed tiers, and kill the complexity in its pricing model. Consumers are paying an indirect tax for broadband in the form of CVC.”

CVC, the price telcos pay to move data from the NBN to their networks, is shaping up as a major issue for NBN Co and the Morrison government.

Vodafone has labelled CVC an artificial imposition put on telcos to keep the NBN Co financially viable. Telstra boss Andrew Penn has consistently maintained that NBN Co’s pricing model was making it harder for telcos to offer affordable broadband to consumers.

Mr Penn told The Australian this week the $50 billion project was at risk of being rendered worthless unless drastic changes were made to its business model.

“Basically all operators are losing money reselling the NBN, and therefore some, and they’ve said it publicly, are looking at 5G to bypass the NBN,” he added

NBN Co’s wholesale pricing has been a controversial issue since day one of the project, however, the company maintains it has already delivered successive price relief to the telcos.

“Wholesale broadband prices have decreased since they were first set eight years ago,” said Ken Walliss, general manager commercial at NBN Co.

$3.25 Vocus Group closed up 11¢ p

“At the last major consultation in 2017, NBN Co spent time listening and consulting with the industry and retailers, which led to the introduction of discounted pricing across residential and business bundles.

“Since those discounts were introduced, about 64 per cent of customers are now subscribed to wholesale speed tiers of 50 megabits per second or above.”

Despite the cuts and discounts the core issue of CVC remains unaddressed.

The telco industry labels CVC a blatant cash grab by NBN Co and Vocus hasn’t minced its words in its submission, saying that by forcing telcos to ration capacity, NBN Co has consigned consumers to poor broadband.

“CVC is a download tax; it’s a completely artificial tax that creates scarcity where there is none. It incentivises broadband retailers to ration data consumption, rather than maximise it, NBN Co has effectively abolished affordable speed tiers, forcing users onto premium speed tiers,” the telco said.

Vocus, Australia’s fourth largest telco, has seen its consumer broadband business — Dodo, iPrimus — under intense pressure because of the NBN. The telco’s margins are significantly lowered as customers move from ADSL to the NBN and it has also lost market share to rivals that are better able to absorb the costs associated with higher speed NBN plans.