The National Broadband Network Company has joined broadband forum Whirlpool in an attempt to better inform the public about its muli-billion dollar project, with its first post last night being an extensive entry providing information around its ISP pricing plans, in an apparent attempt to reply to sharp criticism of its model by Internode MD Simon Hackett.
In a major speech several weeks ago, Hackett described the National Broadband Network’s pricing model as “insane” for small internet service providers, warning that none will survive their walk through the “valley of death” transition from the current copper network to NBN’s fibre future. According to Hackett, the NBN’s pricing model will only be feasible on a national level for ISPs with larger than 250,000 customers – which only five retail ISPs in Australia can boast – Telstra, Optus, TPG, iiNet and Internode itself.
However, in a post on Whirlpool yesterday, NBN Co head of product development & sales Jim Hassell again pointed out that Hackett’s argument was based on the assumption that an ISP would want to provide services nationally around Australia.
“Many of the smaller service providers may not wish to do that as the costs of marketing and of servicing a small but geographically dispersed customer base may be quite high,” said Hassell. “As a result, many of those may focus on a geographical area or set of areas.”
The NBN Co executive gave a range of examples for per-user pricing for ISPs who had less than 5,000 or even less than 1,000 customers, arguing such examples could be apt for regions such as Newcastle. The city’s point of interconnect would serve a market of up to 160,000 end users, Hassell said.
In addition, Hassell said the fact that NBN Co’s wholesale prices were uniform across the country meant that ISPs would be able to extend their services beyond the cities “without the dramatic increases in cost and potential loss of performance that can occur in today’s environment”. Much of the backhaul links currently needed to connect up rural broadband customers are provided only by Telstra on a monopoly basis — with ISPs long arguing the cost of backhaul in the bush made providing services there unsustainable.
“NBN Co will not give any volume discounts. This means the smaller service providers should be able to compete with the larger ones based around their service levels and the value proposition which they offer to customers,” said Hassell. The executive pointed out that yesterday NBN Co announced it had signed up 12 ISPs in total — representing both small and large providers — to deliver NBN services as part of upcoming trials in early stage release sites on the mainland.
NBN Co’s post on Whirlpool was largely welcomed by the forum’s denizens. “Thank you, Jim. It’s nice to finally get some NBN Co representation on Whirlpool!” wrote one.
The news comes as Communications Minister Stephen Conroy also yesterday criticised Hackett’s argument. “I think some of Simon’s arguments have been very valid but that doesn’t mean they are the answer to all the solutions,” he said.