Communications Day

TELSTRA WHOLESALE: Promises symmetrical 4G Ethernet + 5G wholesale services TELSTRA, VHA: Slam revised NBN pricing changes 7,368 readers OP-ED: VHA suggests how NBN can solve its pricing issues last issue* COMMUNICATIONS DAY

4 November 2019 What’s happening today in ANZ telecoms ISSUE 5799 Bill Morrow hired to head cost-cutting efforts at AT&T Former VHA and NBN Co CEO Bill Morrow has returned to the American telecom industry, taking up a position as Managing Director of Process Service and Cost Optimi- sation at AT&T. Morrow has been given a company-wide brief at the American operator to drive cost cutting to help it achieve a 2% margin lift over the next three years. He has also been given the title of special adviser. AT&T CEO Randall Stephenson said of Morrow “he’s leading our enterprise-wide cost-reduction initiative.” “Bill has been CEO of large communication companies in the US, Europe and Aus- tralia, and he has a proven track record of creating best-in-class cost structures. He'll have full authority to examine and change our cost structure across the entire company to ensure that we achieve the targets that we're outlining,” Stephenson said at an analyst brieϐing. “Bill's work will be overseen by the Board's Corporate Develop- ment and Finance Committee and myself. And it will be above and beyond what we’re already doing with network virtualisation, real estate consolidation and our other ongoing cost-reduction initiatives.” Speaking of Morrow and AT&T’s WarnerMedia chief John Stankey, Stephenson said “These are two process improvement hawks. They are probably as good as it gets an- ywhere in terms of streamlining process, simplifying process and taking cost out.” “We’ve been talking to Bill Morrow for a while. And knowing that we wanted to bring on someone with those talents and those skill sets. So we will give him some time to get his feet on the ground, but we expect him to hit the ground running. And we will have plans in place and identiϐied opportunities already that we'll start opera- tionalising as soon as possible, many of those things before the end of this year.” Morrow started in the position last Monday. He departed NBN Co after a 4 year 6 month tenure as CEO in September 2018, following 2 years as VHA CEO. He last worked in the US as the CEO of ClearWire in 2011. Although a 2% margins growth target may seem modest, Morrow’s task is signiϐi- cant with the forecast cost savings matching, in revenue terms, the entire size of both of the telcos in Australia he recently helmed. AT&T has US$170 billion of annual revenue and over 270,000 employees. Grahame Lynch

* measured by downloads from our Ecast publishing platform at 6pm yesterday Telstra Wholesale plans symmetrical 4G plus 5G offerings Telstra Wholesale is set to bolster its wholesale mobile service offering for MVNOs and resellers, promising a symmetrical 4G Ethernet Access product next year and a 5G offering upon the completion of testing. The Telstra unit unveiled the promised service offerings at its annual Business Con- nect event for wholesale customers, held in its Sydney CBD Cus- EXCLUSIVE tomer Insights Centre last week. A Telstra spokesman said the symmetrical 4G service would be an “Ethernet Access - Mobile Backup product, which delivers an integrated Network Termination Unit for business-grade Ethernet. We announced we will launch this next year.” “We are continuing to expand 4G network capabilities to provide the best possible experience for our Wholesale customers, with planning also underway to build capa- bility for Wholesale 5G. We haven’t put a date on 5G yet,” the spokesman added. A reseller source, one of 200 at the event, told CommsDay he was told the wholesale 5G product was already in testing and would be available when that was successfully completed. However the symmetrical 4G product may be of more initial interest as the business MVNO sector ϐirms as a key industry growth area over the next 12 months. According to Venture Insights MD Nigel Pugh, an independent analyst, this is partly due to the stimulatory effect of NBN Co targeting resellers with new enterprise and business offerings. As the number of service providers in that space increases, they will only naturally look to offer complementary mobile services to their business customers. “To date, the majority of Australian MVNOs have been focused on the consumer market and when MVNOs do sell into the business segment they are usually leveraging an existing business brand,” Pugh told CommsDay. “However, I believe that NBN business broadband will enable more challengers to enter the ϐixed business market, eg: Commscentre – and as such it’s only a matter of time before these players look to become MVNOs in order to bundle 4G and 5G mobile services and also take advantage of 5G network slicing for higher quality business mobile services. As such we expect to see more MVNOs enter the business segment.” Currently most of Telstra’s MVNOs such as Aldimobile, Woolworths Mobile and Lyc- aMobile target the consumer mobile sector. Only a few MVNOs, notably Macquarie, Telechoice and Commander, overtly target business mobile customers but with 13 RSPs now directly offering NBN business services there are obvious opportunities for greater competition in the segment. Pugh addressed the Telstra event as one of several outside independent speakers, but the speaking line-up was dominated by senior Telstra executives such as Andy Penn, Brendon Riley and Nikos Katinakis. There were also various workshop-style ses- sions dealing with topics such as the use of Agile and Customer Experience tools. Telstra’s move to up the ante in wholesale mobile throws down the gauntlet to ri- vals Optus and Vodafone.

COMMUNICATIONS DAY 4 November 2019 Page 2 Optus CEO Allen Lew is planning a major media brieϐing this morning in Sydney with new 5G announcements likely, while Vodafone is currently in the ϐinal stages of a tender for who will revamp its network including 5G upgrades. Grahame Lynch

Telstra slams revised NBN pricing changes Telstra has slammed the proposed revamp of NBN pricing, saying “the overall suite of proposals does not resolve the key challenges of delivering affordable, simple products that promote accessibility. Current NBN pricing risks holding-back the take-up and beneϐits of high-speed ϐixed broadband in Australia.” In its submission to the ϐinal consultation of proposed pricing changes, which were announced in September, Telstra is particularly critical of the planned revised entry level bundle which would provide a more generous CVC inclusion to lower speed bundles than is currently the case. “The proposal to reduce prices for low-speed 12/1Mbps and 25/5Mbps speed tiers, whilst not addressing the headline price and affordability of 50Mbps services, risks a perverse outcome by creating incentives that could return the market to the ‘pre-bundles’ period in which a higher number of Australi- EXCLUSIVE ans were migrated to the NBN on slow-speed 12/1 plans,” Telstra said. It added that the real need was for a more affordable voice-only plans, with current prices threaten- ing the viability of offering such service to hundreds of thousands of vulnerable and low-income customers. It also criticised NBN Co’s plan to create a new 100/20Mbps speed tier, positioned as a cheaper alternative to 100/40. “Speciϐically, by creating an unnecessary additional product tier, NBN risks impair- ing the ability of RSPs to operationalise the changes at the retail level through wasted resources, increased costs and avoidable end-user service migrations. Not to mention customer confusion. There is no positive customer experience rationale for the new product, and it appears motivated to protect existing NBN revenue. This type of behav- iour in protecting its ‘back book’ is antithetical to efforts.” And while Telstra supported the introduction of higher speed tiers beyond 100Mbps up to 1000Mbps, it warned “to ensure correct incentives to stimulate take- up, RSPs should not face greater overage risk on higher speed tier services, as compared to lower speed tier services. NBN should increase the proposed CVC inclusions for high-speed services to reduce the risk of overage on the proposed higher speed plans.” Indeed, Telstra said that the entire CVC construct needs to be either eliminated or simpliϐied. “Telstra maintains the ϐirst-best approach to pricing is for nbn to move away from CVC charging and implement a simple, one-part price structure based on speed tiers: better aligning wholesale and retail pricing structures and greatly simplifying network and service management for RSPs. If NBN remains committed to CVC charging, there are still greater opportunities to simplify CVC management and reduce complexity. Speciϐically, rather than modifying the current CVC utilisation conditions, they should be removed entirely,” Telstra said. NBN Co is now considering submissions from RSPs after the consultation deadline passed last week. Grahame Lynch

COMMUNICATIONS DAY 4 November 2019 Page 3 … as Vodafone says NBN pricing changes don’t solve RSP concerns Vodafone Australia said NBN Co has fallen short of meeting RSP concerns over certainty, value and simplicity with some of its proposed pricing changes risking the exacer- bation of existing issues. In its submission to NBN Co’s pricing consultation, Vodafone said “within the current proposal, the counterproductive CVC arrangements remain in place (and in fact, are further entrenched), and this means that there will continue to be signiϐicant cost uncertainty for RSPs. The proposed pricing changes simply postpone ongoing increases in underlying costs for RSPs to provide each of the NBN speed EXCLUSIVE tiers. This means that the ongoing viability of providing broadband services via the NBN access network is put at signiϐicant risk.” Vodafone speciϐically criticised the graded tiering of CVC inclusions with AVCs. “The net outcome of this ‘give and take’ approach is that RSPs will be in no better position to deliver a viable product suite in 2020 than currently, and they will face signiϐicant viability challenges from 2021 onwards,” Vodafone said. “This will result in RSPs being forced to manage major cost increases as customer data consumption continues to grow, with a very high likelihood that these cost increases will end up being passed directly onto end users, or there will be an increased incidence of network congestion.” It concluded that NBN Co needs to make two major changes now before it ϐinalises its new pricing. “NBN Co must tackle the immediate viability problem of the nbn12, nbn25 and nbn50 services. At the very least the proposed CVC bandwidth allocations of the nbn25 and nbn50 services need to be increased to anticipate the expected level of peak household download demand that will continue to grow through 2020 and beyond,” it argued. And it added that “there needs to be a commitment from NBN Co to a timely transition away from the CVC pricing construct. This will ensure we will be able to achieve the objective of a ϐinancially successful NBN Co that delivers pricing certainty; value; and simplicity for the industry and Australian consumers.” Grahame Lynch

NBN Co targets small business sector as next growth opportunity NBN Co will work with a number of industry groups and channels in an effort to help small businesses adopt digital technology to the same levels as their larger counter- parts. It follows research released by NBN Co on Friday that revealed many small businesses have not fully realised their potential because they lack the skills, time or resources to invest in digital technology, or because they lack knowledge of the opportunities that technologies provide. NBN Co CEO Stephen Rue announced at a small business event in Sydney that the company would work with industry bodies such as the Council of Small Business Or- ganisations Australia, Australian Information Industry Association and the Australian Chamber of Commerce and Industry. The program will build on NBN Co’s existing stakeholder activities, business industry partnerships and ICT channel engagements to deliver small business brieϐings and forums, while integrating with existing small business sector initiatives.

COMMUNICATIONS DAY 4 November 2019 Page 4 “Many small businesses have yet to realise the beneϐits of digital technology and the barriers to digital investment, whatever they may be, need to be identiϐied and over- come,” Rue told guests on Friday. “We want to support small businesses to make sure they are in the best position possible, to reap the beneϐits that appropriate technology investment can offer,” Rue added. “This collaboration is really important to us because we want to see Australian businesses succeed.” COSBOA CEO Peter Strong welcomed the approach and noted that the research report gave a clear picture of the digital divide among SMBs. “It also shows how important the Internet is in helping small businesses be successful,” Strong said. “More work needs to be done to help small businesses get comforta- ble with moving online and we welcome a cross-industry approach to raise aware- ness.” RESEARCH SHOWS BENEFITS OF TECH: Rue used the event to formally launch NBN’s Connecting Australia research report, which was commissioned by NBN Co and con- ducted by Alpha Beta. The research analysed how small businesses were investing in technology and the correlation with business performance. While small businesses spent more money on technology over time and the average annual technology spend increasing by 5.2% between 2015 and 2017, overall revenue increased at a faster rate. On average, small businesses spent less than 1% of total revenue on technology, or around $5,000 per year. NBN Co highlighted a “strong correlation” between technology investment and business performance. According to the company, businesses that spent more on technology saw higher rates of revenue and employment growth. Other key ϐindings from the report included one that found average small business connection speeds increased ϐive-fold over the last 10 years from 5-12Mbps to around 30-50Mbps, which coincided with the rollout of the NBN. Speaking on the latest report, communications minister Paul Fletcher said that the ϐindings demonstrated a “clear link” between the NBN and the take-up of digital technologies in small businesses. However, he said there was still a gap between larger or- ganisations and small business productivity. “Small businesses are 98% of all Australian businesses by number and the number of people employed by small businesses are almost ϐive million. But historically, the productivity per employee in small businesses has been considerably lower than in big businesses, in part because of lower investment in information technology by small businesses,” Fletcher said on Friday. “We want to see that gap close and we want small business productivity closer to the productivity levels of big businesses.” Alpha Beta director Andrew Charlton said that the report gave an insight into how small businesses used technology. “Small businesses matter deeply to the economy… what we know now is that the

COMMUNICATIONS DAY 4 November 2019 Page 5 small businesses investing in technology are more likely to grow revenue and more likely to create jobs,” Charlton said. “Critically, with the increasing affordability of ICT, small businesses do not have to spend a lot to get those beneϐits of growth.” FLETCHER ON 5G: Meanwhile, during a panel session facilitated by KPMG sector leader in technology, media and telecommunications Kristina Kipper, Fletcher was asked whether the arrival of 5G would complement NBN. “With each successive generation of ϐixed and mobile technology, we've seen an increase in the speeds and capacities that each can offer but ϐixed, in each generation, has an advantage in carrying large amounts of data to speciϐic locations cost- effectively,” Fletcher told guests. “There will be many applications where 5G will be the better service but there will be many where NBN will be better. I think overall, as a nation, we'd be better off hav- ing them both.” He added that should an alternative technology enter the market, retailers and the NBN would need to compete more, which would effectively beneϐit consumers. Jessica Taulaga

MNF Group set to raise $50 million to accelerate regional expansion MNF Group has announced a $50 million capital raise that will allow it to pay down debt and look to accelerate its regional expansion. The company will conduct the capital raise via an institutional placement at $5 per share, which it said was a 5.7% discount to the closing price of MNF shares on 31 Octo- ber. MNF CEO Rene Sugo gave a business update on Friday and reafϐirmed MNF's FY20 EBITDA guidance of $33m to $36m, which would represent growth of 27% at the guidance mid-point relative to its FY19 EBITDA result of $27.2 million. “The business is performing well across all segments, with continued strong growth from domestic and global wholesale customers, driven by the take up of key products such as UCaaS and CPaaS,” Sugo said. “The ϐirst quarter has delivered to forecast ex- pectations, and management are conϐident of meeting full year guidance,” he added. Sugo said the proceeds of the capital raising will allow the company to pay down bank debt, become net cash positive and strengthen the balance sheet, enabling the company to accelerate its regional expansion strategy in the near to medium term. Meanwhile, it also reported that deployment of its specialised voice network and software eco-system in Singapore is well underway. “The project’s initial phase of network construction, integration, and testing is due to complete in December 2019,” the company said. “The company is expecting to have trial customers on board by the end of March 2020.” Monica O’Shea and Geoff Long

Telstra and Optus welcome ACCC decision on pricing for legacy services As expected, the Australian Competition and Consumer Commission has conϐirmed it will maintain current pricing and conditions until June 2024 for seven legacy wholesale copper services.

COMMUNICATIONS DAY 4 November 2019 Page 6 The ϐinal decision was released on Friday and was immediately welcomed by both Telstra and Optus. The ACCC also noted that it is expected to be the last it makes in re- lation to the ϐixed line services, with customer migration from Telstra to the NBN expected to be mostly done by 2022. In the ϐinal report explaining the decision, the ACCC said maintaining the current prices would provide stability to the industry during the transition to the NBN. The competition regulator noted both Telstra and Optus were supportive of the con- tinuation of existing price and access terms for the ϐixed line services. It said the decision means wholesale prices for non-NBN ϐixed line services would reduce in real terms over the next ϐive years. “Our decision will provide real price reductions and certainty for the industry in re- lation to voice and broadband services, which are still being provided through Tel- stra’s copper network and other legacy infrastructure,” ACCC chair Rod Sims said. “Although the NBN rollout is almost ϐinished, RSPs will still need to use these legacy networks to provide services to some consumers for a few more years. “Maintaining the current prices and other terms of access will give the industry some certainty and stability as the NBN migration continues.” A Telstra spokesperson said: “We welcome today’s decision by the ACCC to rollover ϐixed line services prices, which provides regulatory support for the small number of services that will remain on our copper network. “The simple and quick process has meant the industry can stay focussed on great things like the NBN end user experience and 5G investment.” An Optus spokesperson added: “Optus welcomes the ACCC decision to maintain existing prices for legacy wholesale telecommunications services during the ϐinal years of the transition to the NBN.” Meanwhile, VHA said “We are disappointed the ACCC has decided to maintain high prices for wholesale ϐixed-voice services. This disproportionately favours Telstra as it is the predominate supplier of these legacy wholesale services. Given today’s decision, it would be very surprising if the ACCC do not adopt the same approach in its inquiry into wholesale mobile services as it did in this inquiry.” VHA wants current mobile termination prices to be also be grandfathered. Monica O’Shea

Mobile blackspots program hits 750-base stations milestone The federal government's Mobile Black Spot Program has now funded the deployment of 750 base stations across regional and rural Australia. The initiative to improve mobile services in areas with poor or no coverage hit the milestone with the deployment of a new base station in Nullawil in the Mallee of Victo- ria. According to communications minister Paul Fletcher, more than 70% of the 1,047 base stations to receive funding through the ϐirst four rounds of the program have now been completed. In March, the government allocated $160 million for a further two rounds of the program, taking the government's total commitment to over $760 million. The government also announced the $60 million Regional Connectivity program to improve connectivity in selected areas outside the NBN footprint.

COMMUNICATIONS DAY 4 November 2019 Page 7 Applications for the ϐifth round of the program closed last month, and the selection process will be complete in early 2020. Minister for regional services, decentralisation and local government Mark Coulton said the mobile black spot program is a successful example of collaboration between government, the mobile industry, and local businesses and communities. “Each new mobile tower is connecting regional communities to online services, increasing productivity and generating economic growth, which is why we are continuing to invest in additional program rounds,” he said. Telstra's group executive for networks Nikos Katinakis said Telstra will have invest- ed $280 million over the ϐirst four rounds of the program. “Under the program Telstra has delivered connectivity stretching from Monkey Mia in Western Australia to Weipa in the Queensland Cape York Peninsula, which has added another 185,000 square kilometres of new coverage to Australian communities,” he said. Vodafone has meanwhile added 36,600 square kilometres of new external coverage and extended 4G services to more than 16,000 additional homes, according to CTO Kevin Millroy. Dylan Bushell-Embling

Vonex cites Qantas rewards scheme as significant driver of business Vonex has reported a 14% growth in year-on year sales revenue to $2.41m in its re- sults for the ϐirst quarter of FY20. The company also noted that its recent tieup with the Qantas Business Rewards scheme had accounted for approximately 52% of newly-added customers. “Qantas is driving a signiϐicant number of new customers and high-quality businesses with longer term contracts of three years, rather than two,” the company said. “These new customers have higher minimum spend commitments, typically $30 to $50 per user.” Vonex reported a 25% increase to $1.62m in total contract value for new customer sales compared to the previous quarter and an 18% increase in its cash receipts to $2.5m compared to the same time last year. Meanwhile, the company also reported that company secretary Matthew Foy has tendered his resignation. Dan Smith, who has acted as joint company secretary with Foy, will now assume the role as sole company secretary. “The board expresses its gratitude to the contribution and guidance provided by Matthew over the past three years, including the company’s relisting on ASX in mid- 2018,” Vonex said. Monica O’Shea

Uniti Group looking for new acquisition targets following OPEN completion Uniti Group is looking for further acquisition targets following the completion of its OPENetworks deal, according to company chairman Graeme Barclay.

COMMUNICATIONS DAY 4 November 2019 Page 8 Settlement of the OPEN acquisition occurred with the issue of 6,492,425 ordinary fully paid shares in UWL at an issue price of $1.4461, together with a net cash payment of $18,334,090. The deal was ϐirst announced in early October. Uniti told shareholders that the OPEN acquisition is forecast to be earnings accretive in FY20, cash generative and provide UWL’s ϐibre business with a high growth, high margin annuity earnings stream. It follows the early acquisition of ϐibre provider LBNCo in September. Barclay said the company was now actively pursuing further earnings accretive ac- quisitions. “This acquisition brings together the second and third largest private ϐibre network businesses and is an exciting development for UWL as OPEN has a signiϐicant pipeline of contracted private ϐibre ports that, together with the LBNCo, Capital Fibre Net- works, Pivit and Clublinks businesses, will generate signiϐicant organic growth in long- term annuity earnings for our shareholders.” Geoff Long

Close race for 5G mobile core market: GlobalData New research by market analysts GlobalData has revealed a close race for the emerg- ing 5G mobile core market. In what the ϐirm called the ϐirst “competitive analysis” of the speciϐic portfolio segment, GlobalData said the main vendors – Cisco, Ericsson, Huawei, Nokia and ZTE – are closely matched, resulting in a tough decision for operators. The research evaluated the vendors based on their solutions architecture, market momentum, standards and leaderships, and support for voice and video, 5G services, migration to 5G and web- scale and automation. “The gap that distinguishes leaders from the rest of the pack is very small, and the market is likely to evolve signiϐicantly over the next several years,” said GlobalData principal analyst Glen Hunt. “However, operators’ 5GC decisions today will direct the next decade of global telecom investment and ultimately usher in fundamental changes to the way we live and work.” The research ϐinds Huawei and Ericsson are co-leaders, with Huawei earning high marks for its number of mobile core contracts and for its NFV OpenLab initiative, while Ericsson scored high in contract count, non-standalone deployments and early standalone trials, together with its full stack and CI/DI model and standards leadership. The leaders were followed by Nokia, which scored strongly for supporting operator lifecycle management through the transition to 5G and early SA trials. ZTE and Cisco were also ranked “very strong”. ZTE’s strength comes in its converged core support for LTE and 5GNR as well as its CloudStudio’s support for CI/DI, artiϐicial intelligence-backed automation and service assurance. Cisco showed leadership in early adoption of cloud-native technologies and support for multi-vendor interoperability. Despite these advantages, the vendor landscape is open for disruption, especially with the migration to standalone 5G, the analyst ϐirm said. Tony Chan

COMMUNICATIONS DAY 4 November 2019 Page 9 WONTOK ADDS FORMER TELSTRA SOFTWARE DEVELOPER Sydney-based security services provider Wontok has appointed former Atlassian, Telstra and Nokia veteran Bruce Carney as its new head of product. Carney was most recently principal product manager, ecosystem platform at Atlassian, and was selected for his extensive expertise and global experience. While at Telstra he created the carrier's T:DEV API Program, which was one of the ϐirst enterprise public API programs in Australia. Wontok customers include Telstra in Australia and Verizon in the US.

Op-ed by VHA GM Fixed Broadband Matthew Lobb

Why NBN Co needs to look to New Zealand for sustainable pricing strategies The ACCC recently announced its inquiry into NBN access pricing, which is being con- ducted in parallel with NBN Co’s latest round of pricing reviews - by our count the ϐifth since 2011. The changes from NBN Co’s previous pricing reviews have been welcome, however the universal industry view is that these changes have only been incremental adjustments to a ϐlawed pricing structure. RSPs are unable to optimise the beneϐits of the NBN for their customers and this is holding Australia back. Australia and New Zealand started their national broadband rollouts around the same time, as both countries recognised the consumer and economic opportunities of faster, better broadband. Just as the last decade has seen the All Blacks triumph against the Wallabies, New Zealand has done very well in the take up of higher speed broadband services. In 2012, both countries had similar broadband speed mix proϐiles. Around 90 percent of Australian consumers were using ϐixed broadband services that delivered 25Mbps or less. In New Zealand, it was 98 percent. Fast forward to the end of 2018, and 61 percent of Australian consumers continued to be on sub 25Mbps ϐixed broadband plans, despite the rollout of the NBN. By con- trast, 95 percent of New Zealand consumers were on ϐixed broadband plans delivering speeds that were higher than 25Mbps, with 29 percent of New Zealanders enjoying plans delivering speeds faster than 100Mbps. In 2019 we have seen the NBN speed mix improving, but there’s still some way to go. It’s clear that New Zealand has transformed its national broadband experience far quicker than Australia. We need to catch up! It is important to understand that New Zealand’s triumph is not about infrastructure, it is all down to differences in the wholesale pricing regime. Indeed, it’s not really about the price level. It is about the pricing structure. The unique Australian problem is the CVC construct, which embeds rising costs and increasing congestion into NBN’s economics. Because household data consumption has been growing at an exponential rate, despite some CVC price reductions the average ‘unbundled’ monthly costs of CVC bandwidth have increased from $1 to more than $18 per end user - an increase of 18,000 percent! This cost increase has already made NBN Co’s low-end products unviable and, despite the introduction of the nbn50 and nbn100 bundles in 2018 and NBN Co’s recent pricing proposals, the margin squeeze will soon re-emerge for these two products.

COMMUNICATIONS DAY 4 November 2019 Page 10 The CVC cost spiral can be easily solved by a move to more sustainable pricing structures, like those in New Zealand. Removing the CVC will provide cost certainty for industry and ensure that all Australians beneϐit from the NBN. NBN Co’s price reforms in 2018 (when NBN Co provided a generous allocation of CVC bandwidth per AVC subscription) proved that ARPU growth and better RSP economics can be delivered. Unfortunately, data consumption growth has meant that CVC costs are rising again. NBN Co’s latest pricing proposal for 2020 does not solve this problem. If reform does not happen, we will continue to see offers being withdrawn from market. Speed congestion could return, or retail prices may start to rise. NBN Co’s price changes of the last few years have been a collection of ‘rebalancing’ steps that have moved us gradually closer to the New Zealand subscription pricing approach. We urge NBN Co to transition to the inevitable sooner rather than later. NBN Co should articulate this transition journey today rather than reveal it through annual price review processes. There is a way for all stakeholder needs to be meet, but it re- quires a faster transition path. To achieve this, NBN Co needs to commit to phasing out its reliance on CVC revenue by at least 2021 and instead move to a AVC subscription pricing approach. In the meantime, the proposed CVC bandwidth allocations of the nbn25 and nbn50 services need to be increased to anticipate the expected level of peak household download demand that will continue to grow throughout 2020. HOW TO ABOLISH CVC: This reform can be achieved without impacting the long-term viability of the NBN. If the revised pricing improves the incentives to sell fast speed services, Australia’s speed mix will move closer to New Zealand’s and this will mean that NBN Co can meet its long-term target APRU of $51 per month. In addition to the need for essential CVC reform, the ACCC has quite rightly identi- ϐied that it is now no longer possible for the industry to provide a viable “DSL equivalent” NBN product priced at a retail price point of around $60. Many RSPs have withdrawn the nbn12 and nbn25 products and it’s easy to see why. In 2011 the combined AVC/CVC monthly cost of the nbn12 product was $25 and for the nbn25 product it was around $28. Because the CVC cost component has increased signiϐicantly, the current cost for the nbn12 product is $39 per month and $42 to $45 for the nbn25 product. We agree with the ACCC that the viability of a “DSL equivalent” NBN service needs to be reinstated at a monthly wholesale price point of $35 (note we’re not asking for the costs to be reduced back to 2011 levels). The nbn25 product should be the designated service for this requirement replacing the inadequate nbn12 service as the baseline product. Given many DSL customers can get speeds well above 12Mbps this will ensure that no DSL end user is migrated to an inferior NBN product. It will also have the added beneϐit of retiring the nbn12 product and this will mean that existing nbn12 consumers who are currently paying around $60 will be migrated up to a more acceptable 21st century broadband service. As well as helping the battlers, the retirement of the nbn12 product and a shift to the nbn25 as NBN’s baseline product will do wonders to Australia’s broadband league table position at no additional impost to NBN Co. What’s not to like? Matthew Lobb of Vodafone

COMMUNICATIONS DAY 4 November 2019 Page 11 OVERNIGHT TELECOM STOCK PRICES (ASX) Companies Telstra TPG Vocus Spark Chorus Hutchison Australia Amaysim Macquarie Telecom MyNetFone Group Megaport Superloop Over The Wire OptiComm Spirit Telecom NextDC Speedcast 5G Networks Uniti Wireless Vonex Field Solutions Group

2009: TEN YEARS AGO IN COMMSDAY

Online and interactive pay TV-based betting services proved the big winners from the Melbourne Cup… NZICT said that the telecoms and IT industry should act now to ensure there are enough skilled workers to complete the New Zea- land broadband rollout… iiNet MD Michael Malone kept his cool on the morning of his second day in the Federal Court witness box, weathering accusations of “cynical responses” to the requests of the Australian Federation Against Copy- right Theft.

About Communications Day (including the Line of NZ) Communications Day is the telecommunications news authority of Australia, New Zealand and Singapore. Published daily since August 1994, CommsDay is expertly written and edited by a team of industry writers with a combined 115 years experience in technology reporting across Australia, NZ, Asia, the United States and Europe. CommsDay is available by subscription only and read by up to 10,000 industry executives as well as policymakers and parliamentarians every week day.

PUBLISHED BY DECISIVE PUBLISHING Mail: PO Box A191 Sydney South NSW 1235 AUSTRALIA. Fax: +612 9261 5434 Website: www.commsday.com

THIS PUBLICATION IS COPYRIGHT AND ITS CONTENT CANNOT BE REPRODUCED OR DISTRIBUTED WITHOUT OUR EXPRESS PERMISSION. OFFENDERS CAN BE PROSECUTED. ALL RIGHTS WILL BE EXERCISED.

Contacting CommsDay Group Editor: Geoff Long, [email protected] Editor at large: Tony Chan, [email protected] Journalist: Monica O’Shea: [email protected] Journalist: Jessica Taulaga, [email protected] Columnist: Kevin Morgan, [email protected] CEO: Grahame Lynch, [email protected]

Subscription renewal inquiries: Linda Salameh, [email protected] New subscriptions, advertising and event bookings: Amy Carswell, [email protected] CommsDay Summit/Congress/Edisons sponsorship: Veronica Kennedy-Good, [email protected] Satellite Forum sponsorship: Kevin French, [email protected]

DOLLAR REFERENCES IN THIS PUBLICATION ARE TO AUSTRALIAN DOLLARS UNLESS OTHERWISE INDICATED. WE REFERENCE DOLLARS AS AUSTRALIAN IN ARTICLES DEALING WITH MULTINATIONAL OR MULTICURRENCY TOPICS.