Telstra slams NBN Co enterprise push

Telstra has used its annual general meeting to offer stern and lengthy criticism of NBN Co, claiming the network builder-and-owner is a policy and competition failure.

Speaking at the telco’s annual general meeting for shareholders this morning, chairman John Mullen began by criticising the initial creation of NBN Co, saying competition in the private sector between the likes of Telstra, Optus and TPG would have led to 100MB broadband networks at no cost to the taxpayer.

“Governments could then have decided how much subsidy they were willing to provide the industry to extend this coverage to regional and rural areas where private sector economics were unattractive. This would have been at a fraction of the cost of today’s NBN,” said Mullen.

“Instead, however, in the NBN we have created a state-owned monopoly that is going to cost the country more than $50 billion.”

Mullen also defended accusations that NBN’s wholesale prices are so high because of payments the network owner makes to Telstra for infrastructure access.

“In fact, as the industry well knows, exactly the opposite is true. These payments to Telstra have actually helped keep the cost of the NBN down.”

Mullen moved on to slam NBN’s decision to sell directly to enterprise customers, claiming the company has exceeded its remit.

“The original mandate for the NBN was that the NBN would be a wholesale provider only and would not favour or discriminate between retail services providers, or RSPs. It certainly wasn’t envisaged that NBN Co would negotiate contracts directly with customers and encourage them to seek special deals from certain RSPs.”

“That, however, is what we are seeing today. Instead of remaining a wholesaler, the NBN is now going outside this mandate and is targeting our customers directly.”

NBN Co has also messed up its wholesale role, as revealed in last week's ACCC warning for giving Macquarie Telecom commercial information ahead of its competitors.

Mullen also brought up that RSPs cannot sell to the NBN’s own market due to regulations that prevent them from investing in their own fixed line infrastructure, calling it a “waste of collective resources” to delay investment in infrastructure that would benefit consumers.

“We understand that maximising the financial return of the NBN is important. However, for the NBN to be allowed to move outside its mandate to achieve this but reciprocal competition from RSPs remains restricted, seems inequitable,” said Mullen.

He also argued that wholesale broadband prices in Australia would “fall materially” if NBN Co was opened to competition, noting that Telstra charged $20 per user per month when it was Australia’s regulated wholesale provider, compared to the $44 charge by NBN Co.

“Clearly losing money is unsustainable for all the 180 odd RSPs out there and is why we have seen some companies already starting to withdraw from reselling the NBN.”

“In addition, these economics are leading many companies to invest in 5G fixed wireless and other technological solutions to allow them to offer competitive broadband without using the NBN, which just makes the situation worse.”

Telstra estimates it will be $3 billion worse off due to the roll out of the NBN, though around 50 percent of that has already been absorbed. 

The carrier Telstra also faces a possible shareholder revolt for the second year in a row, with union members rallying to vote down the company’s remuneration report for its executives. If 25 percent of shareholders or more reject the remuneration scheme, it would lead to a “second strike,” which could cause a spill of Telstra’s executive board.