MyNetFone says Budget missed chance to fix NBN pricing mess

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news MNF Group, the Australian provider of hosted voice and data communications services and parent company of MyNetFone, has said it is “disappointed” that Tuesday’s Federal Budget did not write off some of the costs of building the NBN network.

In a statement, the Group said “inaction by the Turnbull Government on this front threatens the feasibility of the NBN business model”.

“The NBN business case is under serious threat,” said MNF Group CEO and co-founder Rene Sugo. “Failure for the scheme to reach a critical mass of activations could ultimately affect the viability of the whole telco industry and leave consumers worse off.”

The NBN wholesale pricing model is currently based on usage and relies on reaching what MNF called an “unrealistic” target of 80 percent of all Australian households having an active NBN service by 2020.

Without reaching that figure the NBN will not generate enough revenue to repay the cost of building the network, the statement said.

Shortfalls in activation numbers, and consequently in revenue, will have to be clawed back via an increase in retail prices.

This could make it a poor proposition for “providers to sell or for consumers to buy”, it added.

“In order to reach its targets, NBN has to be the ‘number one choice’ for data services for consumers and be available at a viable price point for service providers of all sizes to resell. As it stands, this is not going to be realistic,” Sugo warned.

“A fair model would allow middle players to step up and effectively compete in the market, driving NBN uptake and balancing out the challenge of the NBN bypass services. Australia needs a healthy, competitive telecommunications industry for this ambitious NBN build to succeed,” he concluded.

14 COMMENTS

  1. “A fair model would allow middle players to step up and effectively compete in the market, driving NBN uptake and balancing out the challenge of the NBN bypass services. Australia needs a healthy, competitive telecommunications industry for this ambitious NBN build to succeed,” he concluded.

    Can’t argue with that really.

  2. They crippled it on purpose to sell back to Telstra and make it look like its in trouble.

    • Turnbull has spent the last 5 years in politics trying to sabotage the NBN. No way he’s going to do anything that would make it useful or successful.

      Didn’t you know, we can’t afford the NBN, but if you are one of his buddies in business tho, he has no problems finding you $50b in tax cuts!

  3. “The NBN wholesale pricing model is currently based on usage and relies on reaching what MNF called an “unrealistic” target of 80 percent of all Australian households having an active NBN service by 2020.”

    Who’s forecast was that? ;-)

    It’s clear to the numerate few that NBNCo will never be cash-flow positive (any model). The calls to write-off billions of borrowed taxpayer equity are intensifying. Pointed out several years ago, most here still don’t understand the financials (actuals v forecast, experience & qualifications v squealing abuse).

    Only a couple of months ago we were told costs and revenue don’t matter. IRR would be positive because some CP predicted it and Quigley/Conroy said so. How times are changing (not a good year for the FTTH squealers).

    • It’s clear to the numerate few that NBNCo will never be cash-flow positive

      Been talking to some have you Richard?

      Only a couple of months ago we were told costs and revenue don’t matter.

      Costs don’t, revenue may. You don’t get the whole “National Government Infrastructure” thing, do you?

      • Well no, the NBN pricing was set by Labor – they setup the NBN and it’s pricing.
        Not really important who set it but the recent disturbing figures that show that only about 50% of residences actually connect to the network due to the higher on-going cost.
        Far less than the 80% MNF claim are required to make it cost effective.

  4. Tinman_au
    Costs don’t, revenue may. You don’t get the whole “National Government Infrastructure” thing, do you?
    Well said, at times things must be done that is good for the country and all who live in it and good infrastructure like FTTP is a must and if handled properly will pay back in spades, but it appears that some just don’t get it.
    See that road out side your house ? that is Infrastructure.

  5. Easy to spin it around to be an “infrastructure” project now but it never was. From the beginning it was to be “commercially built and operated” which is why it was never funded as an infrastructure project.

    I want the NBN and it will be good for Australia but I’m over the lies, false promises and unrealistic expectations.

  6. continuity with change.

    Beware of the man who cries wolf.

    Who benefits!

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