The death of competition

1

COMPETITION

• NBN’s goal was to create more competition

• But that didn’t happen

• Challenger RSPs (CRSPs) represent just 6%

• Are 4 players enough for competition?

“We have plenty of retailers already selling the product and you can have too much competition that it becomes unhealthy.”1

Telstra

TPG

Optus

Vocus 6%

NBN Market Share2

Challenger RSPs

The NBN landscape

31https://www.itnews.com.au/news/nbn-chief-tells-vodafone-to-accept-prices-or-walk-4708162NBN services in operation RKR Disclosure tables - 30 June 2017

94%

Competition & Innovation

Is 4 enough?

• ACCC stopping mergers at the big 4 indicates a minimum

• High barrier to entry, new entrants need a big cheque book

• It’s not the number, it’s the type

4 might look competitive, but what happens to innovation?

• Challenger RSPs drive innovation and growth

• Lack of this results in increased regulator intervention

Consumer loses out

Slide 4

The problem

Industry and regulators comfortable and complacent

Only need to talk to the big 4 about issues

Who was at the table to represent the CRSPs?

Do the big 4 represent their wholesale or retail interests?

Meanwhile, world ranking continues to drop

Slide 5

The NBN tax

NBN has to provide a ROI• Pricing model not working• Call it what it is: an NBN tax

Morrow is tasked with collecting the Government’s tax

RSPs are the fall guy, expected to collect the tax from consumers

BUT• MNF retail already tried charging more• We learnt the market doesn’t want to pay

6

Taxman

NBN CEO

6%

CRSPs

Meanwhile

CRSPs are stuck in a vicious cycle

> Can’t access 121 POIs

> Selling a hybrid product

> No control over network

> Poor quality end user experience

> Complaints and regulator monitoring

> But we can’t go direct to improve

7

121

POIS

Hybrid product

Lack of control

Poor quality

Regulator

monitoring

It’s all so easy to blame the RSP…

… but is it a level playing field?

8

Direct with NBN

Reseller

Advertising speedsNBN sync reports for FTTN/FTTB X

Managing Service PerformanceNBN CVC SCH report (real time) X

Making NBN EasyDirect Access to NBN Service Management and Technical Account teams

X

Increasing Uptake with Speed and EaseDirect B2B online access X

The NBN race

Was supposed to be about competition and speed

We got invited

We trained for a speed race

We turned up to the start line…

9

We fell at the first hurdle

…Turns out it was a hurdles race1. 121 POIs

2. No dark fibre

3. CVC cost structure

4. NBN tax

The hurdles are getting bigger!

The

Big 4

Another hurdle

Lack of NBN accountability to TIO is crippling the industry

• Double-handling of complaints

• Adding overheads

• Trashing RSP reputations

RSPs have no control over NBN showing up for appointment times

NBN SLAs but no repercussions if not met

Consumers should be able to deal directly with NBN on connection issues.

There’s no accountability. 11

ACCC trying to help

Tell consumers average evening peak speeds

Confusing & doesn’t solve underlying problem

Mandatory reporting adds complexity and cost

• Disproportionate cost to CRSPs

• Reporting on something outside their control

The hurdles continue to get bigger

What else is next?

12

The original NBN mandate

The vision1. Level playing field

2. Increase competition

3. Affordable Broadband for all

4. Innovation engine

5. Digital economy

What happened1. 121 POIs

2. Increased hurdles

3. CVC and IRR

4. Usage based CVC

5. The NBN

13

Fix the CVC and POI issue and the market will adjust

What should we be doing?

Give the market opportunity and CRSPs will drive change

NBN is supposed to be Australia’s most high tech company BUT

• I can order an UBER and see exactly where my driver is

• NBN spent $700K doing a logo refresh…

… but they can’t do a simple appointment tracking app or get their techs to appointments on time.

Let’s shift NBN’s focus

• Less: thinking about tax collection & pricing models

• More: Service delivery and high tech solutions

14

What should we see from NBN?

Bill 4.5/5

Ford Transit

ABC 123

Order NBN

Your NBN tech arrives: 14th Sep 2017 10:00AM380 George St, NSW 2000

Your Invoice

10th Oct 2017

$150Due: 1st Dec 2017

Your tech summary:

-----------------------------------

Please rate your

experience

15

FTTN HFC FTTP FTTB

What are we doing to help?

Fostering competition

• We are innovating

• Provide tools to enable CRSPs to compete in the market

• Provide risk free, all included plans

• iBoss billing (we use it, you can too)

• Support open source

• Industry leading automated porting

16

Call to arms

It’s not too late to fix and restore the original NBN vision

But, Government needs to act soon

Remove the barriers of going direct

• Aggregation of POIs

• Fix CVC once and for all

MNF Group and others responded to the NBN consultation paper - Pricing Evolution

Second Consultation (PR143)

• Listen to the CRSPs

• Don’t just pay lip service

17

Our commitment

Aggregate the POIs and remove CVC and we’ll invest

and innovate

• Direct integration will give us control

• We will be able to offer a quality service to consumers

• Competition will increase as other CRSPs will do the

same

• NBN becomes a sprint race again

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2015

20082009201020122013

200820092010201220132015

20152016

Enabling competition for the telco industry

Thank You