Australian ISPs hit back at NBN Co's "price war" comments

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Australian ISPs hit back at NBN Co's "price war" comments

Australia's internet service providers have hit back at NBN Co chief executive Bill Morrow after he claimed they were responsible for a "price war" that is driving customer's dissatisfaction with the network.

Morrow accused ISPs of promoting a "land grab" mentality by fighting for the same customers by driving prices lower and lower without regard for service quality.

“The large number of competitors going after the same customer has driven price to be the key attraction and seldom do you see any clarity around speed options or quality during the peak time of day,” Morrow said in a position paper.

Inabox chief executive Damian Kay took to LinkedIn to vent his frustrations, saying that playing the blame game doesn't help jilted customers.

"The model is flawed and everyone but you seems to get it. With no direct access to NBN for most RSPs due to 121 POIs, we couldn't offer a guaranteed throughput service for a greater price as we can't control the end to end experience," he wrote.

"We are forced to go through 'The Big 4'. So stop the rhetoric and think about this holistically. The bottom line is that with input costs as high as they are mobile becomes a real threat. Does mobile spectrum cost $15Mbps like CVC? Nope! Start being constructive and stop the anti RSP propaganda. Work with the industry and not against it."

MyRepublic managing director Nicholas Demos agreed that the current wholesale pricing model was flawed. He told CRN that customer disillusionment with the NBN lies with ISPs placing customers on the cheapest speed tiers available.

“The problem is the pricing model is not fit for purpose. The NBN is meant to provide a level playing field so that RSP’s can deliver better speeds and service to the Australian consumer. NBN has acknowledged this by trying to advertise different speed tiers, currently due to the wholesale construct, the RSPs keep putting people on slower speeds, which just defeats the purpose," he said.

“That's why at MyRepublic we put customers on the 100Mbps speed tier and optimise our network to provide the consumer with the best they can get at their address.

"We also recently reached out to the public to find out if customers wanted higher speeds of up to 1Gbps, with our competition to light up Australia’s first Gigatown. We had an overwhelming response with thousands of entries and 76 percent of the people we surveyed wanting gig speeds. We are hoping that the current NBN pricing review will work for the NBN, the RSP and the consumer for Australia to rise in ranks of connectivity."

In his submission, Morrow singled out Telstra, the telco with the largest market share of NBN customers. He accused Telstra of reducing its retail price by more than 20 percent for its 25Mbps.

“As a result, we have seen their market share jump over two percentage points to now be over 50 percent from 12 months ago. Others have had to follow on price reductions to remain competitive.”

A Telstra spokesperson responded to iTnews, and was surprised at the sentiment from Morrow.

"We set our fixed broadband services apart based on network quality, service and included extras like Telstra TV and Telstra Air wi-fi data that Australians won’t find anywhere else – as well as value for money,” the spokesperson said.

"We want our customers to have the best possible network experience on the NBN and we’re careful to purchase the right level of bandwidth to support speeds."

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