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Telstra Boss Penn, Slammed After Starting War With NBN To Deflect Own Problems

Telstra boss Andy Penn has moved to deflect criticism of the carriers falling revenues and reduced dominance in the market by starting a head on war with the NBN who have slammed him for his comments claiming they are untrue.

Penn who is currently facing mounting criticism after sacking 10,000 people and with service complaints rising has moved to take on NBN boss Stephen Rue over wholesale prices, warning the $50 billion network risks being stranded as customers and retailers abandon it for cheaper wireless alternatives.

This is the same Company that charged consumers a premium when they first rolled out their 4G network and were the dominant carrier in the 4G communication market.

Telstra CEO, Andy Penn

Rue has vigorously defended NBN’s pricing in an interview The Australian Financial Review.

The NBN policy when it was first rolled out was aimed at to resetting the competitive playing field that for too long had been dominated by the likes of Telstra who were charging Australians premium prices for their communication connections.

The NBN was designed to deliver universal broadband access that included parts of the country that retailers had felt were commercially unattractive.

Penn is not happy that all carriers accessing the NBN pay the same flat wholesale fee of claims that the NBN Co is expensive by global standards are unfounded.

Penn wants the NBN to knock $20 off its monthly wholesale price.

Penn warned in the blog that unless the NBN cuts its prices for two of its most popular plans by $20 a month, the entire economics of the $49 billion project will be undermined.

He says consumers will seek alternatives to the government-owned monopoly provider.

Mr Rue dismissed claims the NBN was unsustainable, saying calls for such a radical price cut ignored the government requirement for the broadband network to pay for itself.

“It doesn’t surprise me that as the telecoms industry heads into financial results season, NBN’s wholesale pricing plans have been cast in the spotlight once again. Further, what retailer, regardless of industry, doesn’t want to get cheaper services from their wholesaler?” Mr Rue writes in the Financial Review today.

Mr Rue dismissed a Link Economics study quoted by Mr Penn that found broadband prices in Australia were among the highest in the world. He said an Alpha Beta study commissioned by NBN Co found that out of 22 countries, prices in Australia were seventh most affordable.

In an explicit dig at Telstra, Mr Rue said billions of dollars of NBN revenue went in payments to the telco giant, having “an obvious impact on wholesale prices”.

“Let’s not forget that the sum of all NBN payments to Telstra was around $2 billion this year. Our corporate plan points to a continuing payment to Telstra for access to ducts, dark fibre and facilities of $1 billion annually from FY21, representing 20 per cent of forecast revenues, and continuing for decades after the build is completed,” he said.

Yesterday Vodafone Australia released financial results showing the mobile market in Australia is intensely competitive.

This is obvious from movements in the Vodafone average revenue per user numbers and the proliferation of plans offering generous amounts of data downloads claims the AFR.

Penn argues that telecommunications is “fast becoming the single most important infrastructure in the country”.

“That is why it’s so important we have the right national policy and regulatory framework in place for Australia’s telecommunications networks,” Penn said in his blog.

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