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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 in- dustry, 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 reve- nue 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 of- fering 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 busi- ness 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 mo- bile 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 bun- dles 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 mar- ket 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 com- pared 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 simpli- fying 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 certain- ty, 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 cur- rent 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 increas- es in underlying costs for RSPs to provide each of the NBN speed EXCLUSIVE tiers.
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