http://www.theaustralian.com.au/bus...n/news-story/7d6c112d7b6388...

http://www.theaustralian.com.au/bus...n/news-story/7d6c112d7b6388753df5a6b5f1d5df32

As the NBN becomes more of a reality with over 1.3 million users the reality of dealing with the monopoly business is hitting home with some self-serving cries of pain from some obvious quarters like TPG, Telstra and Optus.
Given Telstra will be receiving something like $98 billion in taxpayer-funded payments over the next couple of decades, its complaints should be understandably muted.
The fourth-ranked player Vocus has no complaints on the access charges to the network because it is a straight reseller of other people’s equipment and consequently isn’t facing the same margin erosion.
The big three have their own equipment provided albeit inferior service but higher margin access, which explains why they are bleating.
The whole industry complains about the so-called CVC charge, which is the bandwidth charge they must buy to ensure customers have access to service at the nominated speeds.
The industry doesn’t like the uncertainty of bidding for access when you don’t know how much people want. But come to think of it, this is exactly the dilemma faced by BHP when it is digging up iron ore or Target when it is importing the latest fashion item.
The NBN has to make a return on investment of at least 2.4 per cent (it now makes 3.3 per cent) or the government is required to put the $49 billion network on its books as debt, which would obviously blow the budget figures.
That explains why the NBN is charging the bandwidth fee, which has fallen from $21 per user to $15.50 and is slated to fall to $10 the more people use the network.
TPG wants the fee down to $8 per user and says at that level it could sell unlimited bandwidth, while Geoff Horth at Vocus would prefer the certainty of the loss-making New Zealand service where you simply pay the access charge so you know what you are getting.

That is where the debate lies. Whereas in days past Telstra was the industry’s
favourite villain as the monopoly infrastructure owner and retail competitor, now it’s the government monopoly, the NBN.
The government’s $29.5 billion in equity runs out this year so next financial year NBN will have to be self-financing.
It is this reality plus the rules surrounding return levels explain why the industry talk will fall on deaf ears when it comes to NBN chief Bill Morrow.
Morrow is delivering to plan and cutting charges as promised; it’s just no business likes to face uncertainty at the hands of a government monopoly.
Those who argue the business case is unsustainable are spending too much time listening to self-serving claims by users who could always offset their costs like every business by lifting retail prices. That would risk losing market share to a competitor, which is an anathema to any business.
The question which is yet to be answered now the NBN rollout is stampeding to its target of 8 million users is whether it is a net positive for competition in the industry, and so far the answer is a definite not yet.
That after all was the raison d’etre for the whole project.