• NBN’s SAU built on flawed historic foundations
• New Government has the opportunity to put Australian broadband users first
• Rebooted SAU process can make a clean break from the policy mistakes of the pas
  

Vocus, Australia’s fourth-largest NBN retailer and owner of dodo, iPrimus and Commander, has called for a reboot of the NBN SAU process to put Australian broadband users ahead of NBN’s financial returns.

“NBN’s proposed SAU variation is built on the flawed foundations of its history,” said Vocus CEO Kevin Russell. “The new Government, with its commitment to keep the NBN in public hands, has an opportunity to make a clean break from the policy mistakes of the past – and reboot the SAU process to put Australian broadband users first.”

“Put simply, the real market value of the NBN is far less than what it cost to build. Because of this failure to recognise the real market value of the asset, NBN has proposed SAU variations as a monopoly targeting unrealistic financial returns, rather than addressing consumer needs and market reality.”

A reboot of the SAU process, coupled with a new Statement of Expectations, should seek to:

• establish NBN as a sustainable business capable of maintaining a credit rating,
• enable NBN to maintain and invest in the network,
• offer affordable, market-led pricing,
• facilitate a vibrant competitive market for Retail Service Providers (RSPs).

“With the network build complete and upgrades now underway, this process should look forward, not back,” Mr Russell said. “Without a new approach, NBN’s unrealistic financial targets could continue to impact affordability, constrain digital inclusion, and hold back innovation for decades to come.”

Vocus provided a submission to the ACCC SAU variation consultation process where it called for NBN’s proposal to be rejected.

NBN’s proposed pricing includes initial price hikes of almost 15%, followed by ongoing annual price hikes over the next two decades – meaning higher broadband bills for millions of Australian households. NBN proposed the biggest price hike on the most popular speed tier – 50Mbps – which accounts for more than half of NBN services in operation today.

“NBN’s proposed pricing would charge higher prices for the exact same broadband speeds Australians already receive today,” Mr Russell said. “NBN’s flawed model is pricing affordable broadband out of the market by stealth. Due to NBN’s consumption-based pricing, the ACCC predicts a 50Mbps broadband service will cost as much as a 100Mbps service within just 5 years – pushing more households onto expensive broadband plans they might struggle to afford.”

• 50Mbps services will cost almost 15% more under NBN’s proposed wholesale pricing
• 4.8 million Australian homes (55% of NBN services) purchase the 50Mbps speed tier
• 7.1 million Australian homes (80%+ of NBN services) choose speeds of 50Mbps or less (and consumption-based pricing would remain on these speed tiers under NBN’s proposal).

Retailers will pay more to get less under NBN’s new wholesale pricing – increasing pressure on broadband bills. The 50Mbps price hike is made up of two parts: NBN will increase monthly wholesale costs by more than 10% from $45 to $50; and NBN will decrease the amount of included data capacity from 2.65Mbps to 2.45Mbps. Combined, wholesale costs for the exact same service will increase from $45 to $51.60 – a hike of almost 15% (NBN charges $8 per Mbps of data, so an extra 0.2Mbps of data = $1.60).

About Vocus

Vocus is Australia’s fourth-largest NBN retail service provider with 7.3% market share and close to 640,0000 services in operation across its wholesale and retail businesses. Vocus Retail owns and operates three of Australia’s most well-recognised telcos – dodo, iPrimus and Commander – while Vocus Wholesale provides NBN services to a range of broadband retailers. Vocus operates 25,000km of secure, high-capacity fibre connecting all Australian mainland capitals with New Zealand and South East Asia.