pricing
The NBN and competitive neutrality
In my previous column, I said I would explain how the discount rate might be set for a company with neither debt nor equity. The NBN is not quite the same but the same solution was used for it both by the ACCC and the BCR. Combining that information with the BCR’s estimate of the economic loss that the NBN incurs in supplying fixed wireless and satellite services, I find that that there is some evidence that the NBN is breaching competitive neutrality – i.e. competing unfairly. This issue was first raised by the NBN’s competitors in greenfield fibre sites and the issue is likely to arise again.
The most logical solution, it seems to me, is to write-down assets (and the corresponding amounts in the ICRA) so that the overall internal rate of return becomes commercial.
For more, see Economuse 2016-06-06
Data roaming – Let’s roam like at home
The OECD’s latest report on the state of international data roaming shows that Australia is getting left behind. The cost of using data overseas is outrageously high. Efforts to reduce such costs on a reciprocal basis for travel between Australia and new Zealand stalled two years ago. There is draft legislation on both sides of the Tasman that will give the responsible regulators the teeth to see progress. It needs to be acted on.
For more, see Economuse 2016-04-29-roam
CVCs – Is pricing crippling the NBN?
This week, Bill Morrow announced another tweak to CVC pricing which seems to imply a $1.75 cut in the current $17.50/Mbps CVC price as early as July. But even with this and tiered discounts (for which an implementation date has yet to be announced), CVC costs per end user are going to be double what the sector is looking for.
In the PC world we have seen that bigger chips and improved performance have been closely followed by more sophisticated software that eats up the new capacity. But, we have a chicken and egg situation with the NBN. We know that users are not prepared to pay for speed. Users will not need more speed until the applications require them. And the applications will not arrive until users have the speeds to use them.
We can cut through this impasse and unleash innovation if nbn™ Co. turns on speed with just one or two AVCs (say, up to 100 Mbps and unlimited). It would catapult Australia to the top of global speed ratings. More importantly, Australia would become the global lab for developers looking for ubiquitous, true broadband.
For more details, read Economuse 2016-04 and (same day) COMMUNICATIONS DAY-7-4-2016
CVCs again – this is not the end game
NBN is doing another consultation on CVC pricing with some of its customers. CVC pricing has been a problem for the NBN from the outset and these secretive consultations do not reflect the openness and transparency promised the current management team.
However, enough details have been leaked to make some comments on the latest ideas; which are due to be trialled from April. I just wish it would try the ideas I have been telling it for over 6 years now.
So, here it is: Economuse 2015-11-30
2015 Review of Broadband Pricing
This is the 8th in an annual series that reviews retail broadband plans in Australia.
To read this click Economuse 2015-09-29