The managing director of the small ISP MyRepublic claims the average revenue per user earned by the NBN Co will continue to be low because bigger telcos like Telstra, Optus, TPG and Vocus push slow-speed connections to their customers in order to avoid popularising the NBN.
Nicholas Demos (below, right) told iTWire that the big four had no interest in making the NBN an attractive proposition because it was a direct competitor to their businesses.
He pointed to the statement made by NBN Co chief executive Bill Morrow on Monday, where the latter had said that the company was getting $43 per month from retail service providers but needed $52 if it was to break even.
Demos said it was ridiculous that any company would offer plans with download speeds of 12Mbps on what was claimed to be a fast broadband network. "But that means the cost of the subscription is lower than if one wanted a 100Mbps plan. So the amount paid to NBN Co is less – and that is what the big telcos want."
{loadposition sam08}He said he always put his NBN customers on 100Mbps plans; 90% of his customers were on the NBN and the remainder on ADSL.
Thus, he said, there was an incentive for him to earn as much as possible from the NBN and also make it as attractive a proposition as possible to his customers. This was the direct opposite of what the big four were out to do, he claimed.
He described the NBN as a network with disclaimers, and tore into Morrow for saying that it should not be compared to networks in other countries.
"It’s an NBN with disclaimers and the Australian public are being confused by a constant flow of excuses," Demos claimed.
“Of course we should compare ourselves to other countries, just like we should be able to compare our Internet speeds with our own next-door-neighbours. Not only that, consumers shouldn’t have to experience lower evening peak rates because of the current flawed pricing model."
This lower evening peak rates he tied to the lower purchase of bandwidth by RSPs due to the connectivity virtual circuit prices.
While the price in Australia was between $10 and $15 for a 100Mbps connection, in Singapore it was a flat charge of $2, he pointed out. In New Zealand, there was no CVC, only an access virtual circuit charge.
As MyRepublic pointed out to iTWire earlier this year, the charges are quite different. In Australia, the AVC charge for a 100Mbps connection is A$38 while the CVC is A$15.25 per Mbps (1.4Mbps required). In New Zealand, a connection of the same speed would cost between NZ$43 to NZ$45, which includes the CVC.
For a 1Gbps connection in New Zealand, there was an AVC charge of between NZ$60 to NZ$65 which includes the CVC charge. In Australia, the AVC was A$150, while the CVC was A$15.25 per Mbps, with 2.5 to 3Mbps required.
Costs such as backhaul, operations, sales and marketing and telephony costs are excluded from these amounts.
In Singapore, the minimum speed on offer is 1Gbps and the government had met ISPs a couple of months to discuss whether this could be raised, he said.
"The Singapore NBN was launched in 2012 as a PPP (Public, Private, Partnership). It was orginally called Opennet but then changed to NLT (Net Link Trust). Therefore public money and private money was used. The mandate was to become a public company within five years which it did two months ago," he explained when asked about the differences between the Singapore set-up and that in Australia.
Demos said the NBN Co was more interested in making a profit than ensuring that customers were happy.
“The focus should be on customer value, not NBN Co needing protection to make a profit. As the fibre broadband leaders in the APAC region, we know the level of network capacity that is required to deliver what’s promised.
"The NBN Co pricing model isn’t ‘fit for purpose’ and it’s holding everything back. It needs to create more customer value, starting with abolishing low-speed tiers such as 25 Mbps and below."