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New CEO at the NBN company – where to go from here?

 

The internal appointment of Stephen Rue clearly indicates that neither the government nor the NBN company are planning any changes. Some of the questions that have been raised over the last year include; does part of the nbn investment needs to be written down in order for it the be financial viable; what are the plans for the  upcoming privatisation, and will the company be split along technology lines. The fact that the position is filled internally clearly indicates that the message is ‘steady as you go’, continuing on the path the government and nbn co have set out for their broadband business.

Whether you like the current NBN  policy or not, it does make sense to finish the job. The questions as stated above do remain; any resolution to them will take years of preparation and organisation, and this delay further increases uncertainty in the telecoms market.

This will most certainly have a negative effect on any investments in the telecoms industry following the finalisation of the NBN rollout. There is a clear need for further investment to bring the network up to scratch, and the question is who is going to do this? Will the NBN company do it, or will the government privatise this company; and, if so, who will buy it (or be allowed to buy it), and will they invest further? Without regulations it will then concentrate on the more affluent parts of the country and what would that mean for the rest of the country?

Will the government go ahead with a split-up of the NBN along technology lines? This would be a real disaster as it has the potential to create monopoly areas.

What will be the role of Telstra in all of this and how will it affect its future? Its recent drop in profits clearly indicates its future is also in the balance.

A more immediate result of government ineptness will be that smaller players will be squeezed out of the market. With the rollout nearing completion there will be fewer customers that need to be transferred and therefore fewer opportunities to increase market share. The margins are favouring companies that can build up very large customer bases, and so the smaller ones simply will not be able to survive. This will lead to consolidation among the retail service providers (RPS) and several of them will simply go bankrupt or close up shop.

Without a clear direction of where the NBN will go after it has completed its rollout more problems will arrive. These are issues that do need to be resolved and we don’t even have a robust debate on them as the government is shying away from any discussion on this. On several occasions the ACCC, as well as the industry, has asked the government to start the dialogue but so far to no avail; and there is very little chance that this will happen before the next Federal election.

Paul Budde