Wholesale talks stall Telstra, Optus NBN pricing

By James Hutchinson on Sep 30, 2011 2:18 PM
Filed under Communications

Trial agreement extended until December.

Retail service providers and sub-wholesalers are set to begin pushing commercial services over the National Broadband Network from tomorrow as NBN Co begins commercial services for the first time.

But the nation's two largest carriers have confirmed they will not reveal commercial pricing until a wholesale broadband agreement is finalised with the network wholesaler.

The October 1 deadline is understood to mean NBN access seekers will be allowed to start selling commercial services on the back of wholesaler charges previously revealed by NBN Co.

However, the commercial wholesale prices will be charged as part of the trial agreement executed with access seekers in March, rather than the final Wholesale Broadband Agreement NBN Co hopes to use until at least 2013.

A fourth version of the agreement will be released publicly by NBN Co today, as a result of feedback from access seekers in July. Discussions with the competition watchdog around the broadband agreement are ongoing, with the ACCC yet to indicate whether it will accept or force revisions to the agreement.

An NBN Co spokesperson confirmed that it would charge commercial wholesale pricing for a limited time under trial agreements with access seekers.

Variations of the agreement sent to access seekers earlier this month extended the trial agreement's deadline from Friday, September 30 until the end of November.

They also included the three trial sites in Tasmania as part of the broader trial agreement.

The wholesale pricing covered 800 premises NBN Co said had been connected to date, doubling its forecast of 400 properties.

NBN Co would seek to complete negotiations with the competition watchdog in order to finalise an agreement, though it is believed the wholesaler is willing to further extend the trial agreement if it does not succeed.

The ACCC said today that it remained concerned over the potentially limited oversight it had over NBN Co under the proposed agreement.

But the lack of a final broadband contract between NBN Co and retail service providers kept some access seekers from revealing their pricing.

An Optus spokesperson said the telco was still determining end-user pricing for NBN users and would continue a free trial of the network until retail pricing had been released.

They said it was "subject to Optus and NBN Co reaching a wholesale broadband agreement".

A Telstra spokesperson confirmed it would not release retail pricing until an agreement was finalised. It would consume all wholesale charges from NBN Co until then, for the approximately 150 customers it was currently trialling on the network.

 

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Access seekers make their play

The lack of a wholesale broadband agreement had not held back smaller players, with Primus today joining a growing host of access seekers to launch retail prices.

iiNet, Internode and Exetel had all released their initial pricing constructs for users at the first eight sites on the mainland and in Tasmania.

Dodo chief executive Larry Kestelman had also indicated the provider would offer an entry-level product below $40 per month.

Primus confirmed today that it would continue to charge the same fibre-to-the-home pricing on the NBN as other greenfield developments.

The pricing, first reported by Delimiter, began at $49.95 per month for a stand-alone NBN connection with 25/5 Mbps speeds and a 15GB data quota. They extended to $139.95 per month for a 100/40 Mbps service with a 300GB data quota, split over off-peak and on-peak periods.

Bundling the broadband service with voice reduced the monthly product prices by $10.

Sub-wholesalers ispONE and Nextgen Networks have also begun their push for customers today in hopes of building new product constructs around the national network.

They joined competitors AAPT, Eftel-owned Platform Networks as well as Telstra and Optus, who all hoped to make a play for smaller service providers connecting to the network.

Leighton subsidiary Nextgen has provided customers with greater detail about the wholesale product it revealed in June, including three service tiers with differing quality of service and connectivity levels.

Retail service providers would connect to Nextgen at one of 90 points of presence it holds at private and large data centres nationally for a "patch and go" connection to the network.

Nextgen has yet to reveal whether it will include NBN Co's connectivity virtual circuit charges in its wholesale products.

Rival wholesaler ispONE this week offered its first sub-wholesale pricing model to its stable of 150 service providers.

Managing director Zac Swindells would not reveal the commercial pricing but told iTnews that service providers could expect a minimum margin of around 25 to 30 percent.

iiNet indicated in a recent investor briefing that it could potentially increase its margin per customer by 16 percent under the NBN.

"It's guaranteed to make sure that our clients do make money," ispONE's Swindells said, citing significant demand for the product from customers.

"We're not going to drop our pants out of the market, which the likes of Exetel have come out and say they will do. We all know they can't deliver a sustainable product at that pricing point."

Customers would terminate at one of ispONE's own points of presence in a capital city and pay the wholesale cost inclusive of backhaul and connection rates to each of the 121 eventual points of interconnect NBN Co plans for the network.

The sub-wholesaler was yet to connect any customers to the NBN, with Swindells hoping to complete more testing before the end of October.

 
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