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NBN write down

Carriers call for NBN write-down

As the NBN roll-out gathers pace and more premises are cut over onto the new network, Retail Service Providers (RSPs) are starting to feel the pinch. 

The reason? The difference between what they have had to pay in the past to use Telstra’s copper network and the charges being levied by nbn in its attempt to ensure that the mega-billion dollar project makes a commercial return. 

As retail margins are squeezed, RSP’s share prices are being hit, as was TPG’s last year and Telstra’s last week. 

Meanwhile, RSPs say, end-customers’ appetite for truly high speed broadband is being dampened by the high prices they have to pay for superfast nbn-based services. 

The answer?  According to the Competitive Carriers Coalition (CCC), a group of second-tier telcos, the government needs to accept a write-down of part of its “wasted investment” in the NBN so that the company can restructure its prices and spur sales growth. 

The CCC’s recent call for a write-down is not its first and undoubtedly will not be its last. The pressures on RSPs can only mount as an ever-increasing portion of their customers are herded onto the NBN. 

Larger players will be able to offset the margin squeeze to some degree through economies of scale, especially now that nbn has restructured its prices to allow volume discounts. Telstra – and to a lesser degree Optus – will also be cushioned by the payments they receive to shut down their own networks. 

But smaller RSPs are facing extinction – a perverse outcome of a policy that was meant to spur competition. 

Whether or not any federal government would consider a write-down of this highly contentious and politicised national infrastructure, at least before the forecast NBN completion date of 2020, is another question. 

RSPs probably shouldn’t hold their breath.

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