The two major problems with the National Broadband Network business model are the pricing structure and the future level of prices.
In November 2016, the nbn conducted its third secret consultation on CVCs; a controversial aspect of its pricing structure. It is still fiddling with a hopeless construct. The pricing structure is too complex, does not lead to affordable retail prices and will not lead to the transformational outcomes expected from this broadband project.
Worse, the nbn clings to the hope that it can turn a profit on a very expensive project which was priced initially to smooth migration from legacy copper networks. This will mean increasing wholesale revenues per line (ARPU) over time; which has not been the case historically for broadband ARPU.
For more on the latest consultation, read economuse-2016-11-30
The Ministry of Business Innovation and employment NZ is moving to the building block method (BBM) adopted by the ACCC some years ago.There are several ultra-fast broadband providers in NZ and one of them also has a copper network with no decommissioning deadline. The Ministry is seeking views on how this wholesale sector should be regulated from 2020.
My submission suggests that the BBM is just one step towards the utility style regulation that it wants. NZ has the opportunity to also adopt utility style wholesale pricing which addresses its concerns about anchor products, encourages adoption and use of broadband networks while avoiding the mistakes made by Canada and Australia.
The submission can be accessed here: NZ-2016
In the previous column, I argued that the TPG-iiNet merger would cause an alarming increase in industry concentration and less price competition. But with or without this merger the competitive process can still be strengthened with a few changes that will shore-up both competition and NBN Co.
To read how, click Economuse 2015-04-02
NBN Co.’s July consultation paper on pricing and billing has wilfully ignored the only serious option that has been put up against its own product and pricing construct. Unless it is changed, the NBN will not be affordable and will not increase broadband utilisation.
This paper calibrates the options against the 2012-2015 NBN Corporate Plan and other analysis.
It includes the “traffic model” as Option 6 and concludes that this will make the NBN more affordable and give the industry the certainty is seeks in future reductions in unit traffic charges.
The paper can found by clicking here: Economuse 2014-08-14
How compelling is the NBN value proposition? From May 2014, the early NBN release sites are being disconnected from the copper and HFC networks.
The column looks at the implications of take-up and speed choices for NBN’s viability and the national interest.
It also shows how the alternative traffic pricing model (that I have advocated for a number of years now) would make the NBN more affordable for voice-only users and also make the NBN more competitive against mobile services.
To read the column, click here: Economuse 2014-07-21