Telco coalition calls for govt to write off portion of NBN cost

The Competitive Carriers Coalition has called for a major shakeup of government NBN policy ahead of the federal election.

The CCC today released a set of policy proposals and principles for 2016. Among them are that the government should write off a portion of the capital value of the National Broadband Network, in order to reduce the pressure on NBN to recoup the cost of the government’s investment.

The NBN rollout is currently not recorded as a budget expense because it is expected to eventually return a profit.

The government should recognise “the cost that has been incurred because of the changes that have been made to the business plan and the consequent slow down in raising revenue, and the impact of pressure on NBN to maximise revenue to cover these additional costs,” the document states.

“Australians presently face a double whammy situation, both paying more and for longer for NBN to be rolled out, and then paying higher prices for many years as NBN capitalises its initial losses and seeks to recover them through higher access prices for consumers in future years,” it adds

“These pressures are already evident in the high NBN usage charges are faced by retailers. This is completely contrary to the rationale for building NBN in the first place, which was to make broadband universally available and affordable.”

As a result the government should write off a portion of its investment in NBN and force NBN to cut its Connectivity Virtual Circuit (CVC) pricing, the CCC argues.

NBN earlier this year said it would take action on CVC pricing, introducing a discounting scheme designed to ease the burden on retail service providers and ensure adequate capacity is provisioned for users.

The CVC is a capacity-based pricing scheme that is based on the shared bandwidth provisioned for an RSP’s customers (RSPs also pay access charges).

The new sliding discount will kick in on 1 June and will cut prices depending on how much capacity per customer is provisioned on the network. NBN has also indicated it will potentially move to a scheme whereby individual RSPs will receive a particular level of discount based on their capacity per customer.

The CCC also said that the number and locations of NBN Points of Interconnection remain contentious. The PoIs are the locations where the NBN can hand off to another network.

There are currently 121 NBN POIs. The CCC document expresses concerns about the level of backhaul competition at the POIs.

“The extent of existing and likely infrastructure competitive at the NBN points of interconnect should be reviewed by the ACCC with a view to determining whether any transitional measures are required, such as maintaining NBN backhaul in some locations for a longer period, or even if some PoIs are unlikely to ever become competitive,” the document states

“In the event of the latter, the ACCC should report to the Government that either some policy intervention is required to directly stimulate competition to selected PoIs, or how the list or locations of PoIs should be changed to ensure they are in genuinely competitive locations.”


Copyright © 2016 IDG Communications, Inc.

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