In the latest salvo in an ongoing war of words with Stephen Conroy and NBN Co, Internode managing director Simon Hackett has accused the Communications Minister of having “stuffed up” the National Broadband Network pricing model in a way that will slow the growth of broadband in Australia.
On Monday this week NBN Co chief Mike Quigley said the company had opened discussions with Hackett over his ongoing pricing concerns but stopped short of agreeing to change what Hackett has previously described as NBN Co’s “insane” pricing model. The debate between the two companies and Conroy has been raging in the public arena since a landmark speech by Hackett in late March.
Over the succeeding weeks, NBN Co made a number of public attempts to further explain its pricing model, going into great detail about why it had chosen the specific mix, as well as publishing an online calculator that allows users to calculate projected wholesale costs for providing services to its planned network.
In an extensive interview with Business Spectator published this morning (click through to read it here), Hackett re-ignited the debate, arguing Conroy had “stuffed up” the pricing model for high-capacity usage on the network. “He’s been so focused on the transition of low-end users across the new network at 12 megabits, that weirdly the economics go strange at a 100 megabits,” he said, adding that NBN Co’s model had the potential to slow broadband growth in Australia generally.
Hackett did note that NBN Co’s pricing model was “fixable” later, however.
Quigley noted on Monday that ISPs themselves would have to have some skin in the game, as well as NBN Co and the Government. “It’s also clear that we tested this with quite a number of [retail service providers],” the executive said of NBN Co’s pricing model. “Would they like our prices to be lower? Of course.”
Armidale attack continues
The news comes as the NBN has also come under sustained attack from the Opposition in the several days since the network was launched on the mainland in the Northern NSW city of Armidale on Wednesday.
In a statement, Shadow Minister for Regional Communications Luke Hartsuyker slammed the low numbers of Armidale residents who were so far connected to the network trial as “the magnificent seven” in a statement issued yesterday, claiming it raised a serious question mark about NBN pricing — despite the fact that high numbers of residents in the city have consented to have the NBN connected to their premises, and that the Armidale connections are expected to rise significantly in short order.
“When Apple launched their iPad last year, thousands of internet users lined the streets to get hold of the new device,” the politician said. “It was the same story two months later in July 2010 when Apple released the IPhone 4. Thousands of customers braved winter weather to wait overnight to buy the new wireless phone. Apple greeted the waiting with food, drinks and live music.”
“But at the launch of the Gillard Government’s NBN in Armidale, it was confirmed just seven Armidale customers have signed up. The fact that only seven people have signed up to the NBN highlights two things. Firstly, there is a seriously question mark over the amount customers are prepared to pay for higher speeds. And secondly, there is a serious question mark over the underlying demand for higher speeds delivered over fibre.”
Leader of the Opposition Tony Abbott also criticised the NBN on Wednesday, joining colleagues in linking the NBN trial take-up numbers to a lack of interest in the project.
“I fear that this is going to be typical of Labor’s scheme – that they’ll spend $50 odd billion to provide people with something that they don’t particularly want and certainly aren’t keen to pay for,” he said in a doorstop interview in Perth.
“I mean, in Tasmania less than 15 per cent of households have signed up for the service even though it’s virtually there for free. We already know that in Tasmania it cost them $30 million to roll fibre past some 4,000 houses – that’s an average price of about $7,500 per house. We know that Labor can’t be trusted to deliver infrastructure in a competent way, at good value for money. So look, I just think that the more that we learn about the National Broadband Network the more like a giant and unnecessary white elephant it seems.”
Image credit: Internode