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People calling for NBN write-down actually want dramatic price cut: NBN CEO

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The company responsible for deploying the National Broadband Network (NBN) across Australia has maintained that there are no impairment issues that would see the company needing to write down the value of the company, and that those calling for such action are just after a wholesale price cut.

“When people say there should be a write-down, I don’t think that is what they are really calling for. Essentially, they are calling for the wholesale price to fall dramatically,” NBN CEO Stephen Rue told the Joint Standing Committee looking into the business case for the NBN on Monday.

“Calls for a large wholesale price cut puts at risk the long-term viability of the company … without that, I truly believe you put at the digital future of the country, and all the benefits that flow.”

Rue said the company wants retailers to be successful, but that the NBN needs to have enough cash to complete the build, and maintain and upgrade the network. The NBN CEO also restated that the network build would be complete in 2020.

In October, NBN chair Ziggy Switkowski ruled out a write-down, saying the ability to properly value the network would not happen until the 2020s.

Read: NBN chair rules out network write-down

“I think considerations and evaluations of NBN will await the business moving into a normal conventional mode, which will happen when we finish the building in 2020, we complete the conversion of all households and businesses in 2021, we turn cashflow positive, we look forward, and then whoever is going to make a judgment will make it then,” Switkowski said at the time.

Australian Treasurer cum Prime Minister Scott Morrison last year also told ZDNet that the government is not looking to write down the NBN.

“We said at the time that that was not a view that we had held as necessary. It’s not our advice, and it’s still no longer the issue, and we continue to maintain I think a very sound commercial footing for the NBN and the assumptions it’s based on,” Morrison said.

“And of course it has to pass muster on those issues when it comes to identifying and defining the nature of the debt and other finance that’s going into the project, so I mean these aren’t arbitrary decisions that are made, they are subjected to standards on the accounts, and they’re meeting those standards and we expect they will continue to.”

An hour before Rue stepped in front of the joint committee, Aussie Broadband managing director Phillip Britt took to Reddit for an Ask Me Anything session.

Britt said the CVC pricing from the NBN is preventing the company from offering unlimited data plans on speeds faster than 100Mbps.

“The CVC pricing construct is the primary limiter here, we’ve only got 2.5Mbps of CVC allocated under the bundled model and someone on an unlimited plan on those higher tiers would have the potential to really cause some damage,” Britt said.

Contrary to those running the NBN, the Aussie Broadband boss believes the only way for NBN prices to come down is via a write-down.

“I believe we will see the price of the 100Mbps tier reduce over time, but it will require a government write-down of NBN for this to occur. They can’t hold onto the AU$51 [average revenue per user] amounts they are trying to achieve because the mobile guys will wipe the floor with them,” Britt said.

Britt warned that services such as 5G fixed-wireless will put pressure on pricing and hit the NBN’s profitability, meaning that the write-down will be required before any cut flows to consumers, which Britt predicted could come with a change of government.

“I don’t believe we will see higher than 100/40Mbps for a ‘reasonable’ say under AU$100 price point anytime soon,” he said.

Also see: Good enough 5G fixed-wireless broadband could change everything

On the business side, the MD said Aussie Broadband is looking to double its customer base to 200,000 in the next 12 months, and has 26 percent of its customers on 100Mbps plans. Britt also flagged that Aussie Broadband would look to introduce a NetComm 4G backup modem in 2019.

Contrary to the narrative on social media, Britt said the NBN are “actually not bad” to work with, and “genuinely” try to help.

“The most frustrating part for us is customers who have unrealistic expectations, and they don’t take what we tell them as being the best we can possibly do,” he said.

Ever since the NBN relaunched its hybrid fibre-coaxial (HFC) network, Britt said Aussie Broadband had seen improved performance, and the network has become much more stable.

As a middle ground between price and speed, Britt said fibre-to-the-curb is the better solution than returning back to full fibre-to-the-premises, and should be added as an option to NBN’s Technology Choices program that allows users to pay for a better connection technology.

“I think the ship has sailed on that one, I think the best we can hope for is more FttC in the network,” he said.


(Image: APH)

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Both Volkswagen and Tesla are preparing cheaper EVs

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A new report is going around that claims new, more affordable electric vehicles will be coming to market. According to the report, both Tesla and Volkswagen have given new EV programs the green light to create cars selling for between $25,000 and $30,000. That is a price point that will undoubtedly make transitioning to electric vehicles more affordable for people worldwide.

Pricing is one of the main concerns cited by vehicle shoppers for not choosing electric vehicles compared to a traditional car. Many have been waiting for EVs to reach price parity with similarly equipped traditional vehicles. That parity has been achieved in some parts of the luxury segment making EVs more popular in that part of the market.

Advancements in batteries have helped bring the price of electric vehicles down as the battery pack is one of the most expensive parts of the car. More drivers are interested in EVs as driving ranges have increased significantly in recent years. One barrier that remains in the way is the lack of charging infrastructure in many parts of the world.

Many also cite long charge times as a reason they’ve yet to adopt an electric vehicle. With new electric cars in the $25,000-$30,000 price range, one more barrier of entry will be removed. Tesla announced in September that it was planning a smaller long-range electric car using new battery technology that would start at $25,000. Elon Musk also noted that the vehicle will be fully autonomous and revealed a timeframe of about three years from now. The VW car is dubbed the Small Battery Electric Vehicle.

Volkswagen is aiming at a car about the size of its Polo. Volkswagen has offered no indication of when exactly its vehicle might come to market. Reports indicate that the 2024 through 2025 model range is a good guess for when the vehicles might arrive.

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Hyundai and Kia fined $210 million over vehicle recalls due to engine trouble

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The National Highway Traffic Safety Administration announced consent orders this week with Hyundai and Kia related to recalls of vehicles equipped with the Theta II engines. The automakers were hit with combined penalties amounting to $210 million. The NHTSA found that Hyundai and Kia conducted untimely recalls of over 1.6 million vehicles that used the Theta II engines.

The NHTSA also found that the automakers reported certain inaccurate information to it during the recalls. The consent orders establish monetary and non-monetary measures that will enhance Kia and Hyundai’s safety practices. Kia will create a new US safety office headed by a Chief Safety Officer. Hyundai will build a US test facility for safety investigations.

Both companies have promised to develop and implement a sophisticated data analytics program to better detect safety concerns. The agreements will also see each company retain an independent, third-party auditor who will directly report to the NHTSA. These auditors will conduct comprehensive reviews of the Safety Act practices and compliance with the consent order.

The NHTSA is also making both companies commit to substantial organizational improvements to enhance their ability to identify and investigate potential safety issues in the US while consistently and transparently communicating with the NHTSA. Hyundai is subject to a total civil penalty of $140 million with a $54 million upfront payment. It’s obligated to spend another $40 million on specified safety performance measures and an additional $46 million deferred penalty that will become payable if specified conditions aren’t satisfied.

Kia is subject to the total civil penalty of $70 million with a $27 million upfront payment. It’s obligated to spend another $16 million on specified safety performance measures with a $27 million deferred penalty payable if certain conditions aren’t satisfied. The consent orders don’t impact other ongoing investigations by the NHTSA regarding allegations of fires not related to crashes in Hyundai and Kia vehicles equipped with the Theta II engines.

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The NHTSA is opening an investigation into the Tesla Model S and Model X

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The NHTSA announced this week that it was opening a preliminary investigation into potential safety concerns raised by owners of Tesla Model S and Model X cars. The agency has received 53 complaints alleging failures of the left or right front suspension fore links. Of those 43 complaints, 11 incidents occurred while driving.

In its statement issued about the investigation, the NHTSA says that the complaints appear to indicate an increasing trend with 34 complaints received in the last two years, with three of them occurring at highway speeds. The agency intends to assess the scope, frequency, and consequences of the alleged fault.

The investigation will cover Tesla Model S cars ranging from 2015 through 2017 model years and Tesla Model X SUVs made from 2016 through 2017. As these vehicles age, they could be prone to defects that didn’t surface when they were newer. As of now, there has been no official statement from Tesla on the investigation.

There is also no indication that a recall has to be issued at this time. Tesla vehicles have had their share of issues with fire potential from battery damage during accidents. Several fatal accidents have also been blamed on inattentive drivers and Tesla Autopilot driver assistance systems not recognizing hazards in the road.

On Wednesday of this week, Tesla announced that it was issuing a recall on over 9000 Model Y and Model X vehicles due to issues with bolts. The Model X also had an issue where roof trim could detach over time, leading to potential accidents or road hazards. Despite the recalls, Tesla shares are booming, having gained more than 600 percent in 2020 despite the pandemic.

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