NBN Co has defended its pricing approach in the face of strident criticism from an ISP which will be one of its largest customers, claiming comments by Internode managing director Simon Hackett this week didn’t reflect the “reality” of how it would sell services to the telecommunications market after its network was rolled out.
At the Communications Day Summit in Sydney this week, Hackett — who represents the fifth largest ISP in Australia — described NBN Co’s pricing model as “insane” for small internet service providers, warning that none would survive their walk through the “valley of death” transition from the current copper network to the fibre future envisioned by the Federal Government.
According to Hackett, the NBN’s pricing model will only be feasible for ISPs with larger than 250,000 customers – which only five retail ISPs in Australia can boast – Telstra, Optus, TPG, iiNet and Internode itself, which will just reach the cut-off mark.
NBN Co has not responded to a request for comment in reaction to Hackett’s comments. However, in a bylined article published on Business Spectator this morning, NBN Co head of product development Jim Hassell (pictured) argued that Hackett’s comments were based on the flawed assumption that small retail ISPs would want to provide a national broadband service.
“In reality, we think there are other options and likely approaches for smaller RSPs,” said Hassell. “They can take a more regional approach — and indeed, many smaller RSPs have grown much of their business from a local presence in a state or area.”
Hassell added that NBN Co anticipated the development of “a wholesale aggregator market”.
Optus this week confirmed it was planning to offer wholesale services to other ISPs on the back of the National Broadband Network, and it is possible that Telstra’s wholesale arm could do the same. both companies already provide wholesale services to many ISPs around Australia off the back of their existing networks.
To resolve the problem, Hackett has previously advocated a model where NBN Co would provide as little as 14 points of interconnect – which he said would serve smaller ISPs much better. A model with more points of interconnect would serve larger ISPs like Telstra and Optus, he said, which already had infrastructure around Australia.
In addition, the ISP chief wants the cost of what NBN calls its Connectivity Virtual Circuit service providing data to fibre broadband users to come down.
Image credit: NBN Co