As ‘Vodafail’ Looks To Enter Fast Broadband Market, NBN Boss Blames Carrier Wars For Problems

NBN Co CEO Bill Morrow has blamed a price war among ISPs as the root cause of the NBN’s problems with broadband performance by end users at the same time Vodafone or Vodafail as many people call them is looking to enter the NBN market with a 4G SIM modem.

In a position paper published this week, he said ISPs were choosing not to buy enough backhaul to provide proper services, and were simply focused on trying to sign up as many customers as possible.

Apart from end-user problems, this also means NBN Co is facing growing problems with money flow. “Even if we reach our planned 70 percent-plus take-up rate, NBN’s current revenue per user coming from the RSPs will not generate enough total revenue to produce a positive return on the investment made to build the network as it is planned,” Morrow said.

He said the company had always assumed that “those who [offer] their end-users more – and who therefore have the ability to charge more” would need to buy more connectivity virtual circuits to maintain their differentiation, thus bolstering NBN Co’s coffers.

Bill Morrow the former Head of Vodafone and now head of the NBN. 

“The resulting margin squeeze is leaving some retailers with a decision, at least in the short term, to either forgo profit, forgo market share, or forgo high service levels, including optimal speed during typical peak traffic times,” Mr Morrow wrote.

He went on to say that service providers hd no option but to follow when “price setter” Telstra cut by 20 per cent the retail price of its 25 Mbps NBN product.

“There have been many fingers pointed in recent weeks about who’s at fault here. Some of the reporting and politicking has focused on the NBN network’s Multi-Technology Mix as the culprit, but that is simply not true,” Mr Morrow wrote.

Meanwhile, Vodafone who is better known for their spectacular failures, is set to roll out a modem later this year, that defaults to its 4G mobile network if NBN’s fixed service is delayed or broken.

The company’s general manager of fixed broadband, Matthew Lobb, said. “We are a mobile company to date and so what we are announcing is that our wi-fi hub will have an embedded SIM in the unit,” he said.

“So as soon as you get the device there will be a 4G back-up service.”

Vodafone will issue new fixed customers with unlimited access to Vodafone’s mobile network during the set-up period and whenever there are NBN-related faults on their connection, but not mass outages. It will control when the 4G SIM activates.  The Company has not said how much they will charge for the service or whether users will have to be a prior Vodafone customer.