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Challenger telcos demand NBN rethink, seat at decision-making table

A chorus of Aussie telcos outside the Big Four say “innovation is being stifled” by the current national broadband network’s pricing and regulatory environment, and have demanded a greater voice as a result, saying consumers are losing out from reduced competition in the market.

Telecommunications providers Amaysim, InABox, Macquarie Telecom, MNF Group, MyRepublic, and Tasmanet, among others, joined forces on Monday to relaunch their lobbying effort Commpete, formerly known as the Competitive Carriers’ Coalition. The group was formed “to fight for real competition for consumers, small business and the economy”.

Commpete said systematically “identifying and fixing” the factors perpetuating the power of the large incumbents, which it said prevented a level telco playing field, was “crucial and urgent”.

Factors that led to the current situation were “complex and restrictive” contracts and pricing structures from NBN that “only very large companies had the resources to understand”.

Specifically, the group is calling for an increase in their market share as being key to encouraging greater competition.

“Success would be embodied in the growth of the market share of companies outside the top three in fixed and mobile markets from 10-12 per cent to 30 per cent,” they said on Monday.

We are now halfway through [NBN’s] forced migration event and if nothing changes Telstra will remain at that over 50 per cent share of the Australian market,” said Amaysim CEO Julian Ogrin. “That is a failure on competition on one of the single biggest forced migration events in Australian telco history.”

“We think there is still an opportunity for government and for the industry to really address this quickly so that we can get say 12 per cent of service providers, outside of the incumbents, to get up towards 30 per cent of market share by encouraging innovation and customer experiences they have to offer to consumers by getting the [NBN] model addressed quickly so that we can have a much more successful second half of the migration,” he added.

Seat at NBN table

Nicolas Demos, managing director of MyRepublic, said the smaller players wanted “a seat at the table” when it came to NBN regulatory and pricing discussions “so we can compete with the incumbents.”

“At the moment, we feel that innovation is being stifled and that means consumers are losing out because we don’t get a seat on the table to talk directly to the likes of NBN [and] the government,” he said. “That’s what we would really like to get out of the relaunch.”

Meanwhile, InABox CEO Damian Kay complained of the 450 retailer service providers he represented not being able to gain access to some of the new products NBN had on offer at the wholesale level because they could not show to NBN the marketing dollars required in order to receive them.

Kay specifically noted the 50 megabits per second non-contended product, which the government and NBN have been touting as a product to alleviate congestion issues.

“My [customers] really can’t get access to that because under the current environment … it was really designed for the Big Three or Big Four,” Kay said. “We really struggle with it because if we were to have participated it would have [collectively] cost [the companies we represent] A$9 million in marketing funds and our commitment to get access to that pricing at discounts would have been [turning on] 90,000 services a month. Now that is absolutely ludicrous.”

That was “one small example” of where the current NBN environment was “not recognising” smaller players, Kay said.

“For me, Commpete is about having a louder and united voice, to try to get some of those things changed and recognising the supply chain that exists in the NBN market today.”

MNF Group chief executive officer Rene Sugo also lamented the present arrangements. “We don’t believe that being able to spend A$4 billon on infrastructure is innovation,” he said.

“To me, that is just market power. Innovation for us is doing things differently; whether that is pricing or provisioning or service delivery or [introducing] new applications.”

Policy on the run

MyRepublic’s Demos added that he wanted constant changes of NBN policy to cease. “Policy on the run is something that I would like to see stop,” Demos said. “As a new entrant, it is extremely difficult to run a business where the playing field changes, the pricing policy changes, the date of HFC being turned off changes.

“The incumbents it doesn’t really affect as much. [But] we’re a new player with a business plan, a business case… trying to implement policy on the run really does affect you,” he added. “We are looking for more surety in terms of what is happening there.”

Demos also complained about NBN Co’s 700-odd page NBN Wholesale Broadband Agreement, which all retail service providers must sign before being granted access to the NBN.

“You need again to be one of the big players to be able to go through these type of barriers to entry,” he said. “We all know that’s how you make competition… When you are a new entrant you need to connect to all these things.”

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