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NBN could become 'worthless': Telstra CEO

Telstra has a big warning about the NBN. Images: AAP

The troubled National Broadband Network could “become worthless” if a “biased” pricing structure isn’t addressed, the chief executive of Telstra has said today.

Telstra CEO Andy Penn said all broadband operators are losing money reselling the taxpayer-funded National Broadband Network (NBN) and are looking to use cheaper 5G networks to bypass the service and turn a profit.

“I think that’s not necessarily a good thing when it doesn’t deliver the right technology for the customer,” he told Sky News.

“Unless we get the pricing structure right, we’re going to create this unnatural dynamic in the market which biases technology for reasons other than what’s the best technology for the customer.

“If wholesale pricing structures don’t change, that’s what’s going to happen.

“If the whole ecosystem is not viable then not one part of it is going to be viable either and so candidly, my point is that unless the pricing structure is changed and operators can make a return on capital which shareholders are prepared to invest in, then the NBN is worthless anyway.”

As it stands, the budget for the NBN broadband roll out has hit $51 billion – 75 per cent more than announced in the 2015 pre-election budget.

And, it’s been marred by controversy.

Earlier this year, Penn blamed Telstra’s plan to fire a quarter of its employees on its NBN service. He said the network would come to take up to half of Telstra’s earnings.

"The NBN re-nationalises Australia's fixed broadband network and this means Telstra is no longer the main wholesaler provider of this, as it had been since privatisation," Penn said in January.

"The impact of this on Telstra is profound – it means we lose between one-third and half of our earnings. You cannot take away a material part of a company's business and earnings and expect it to carry on with the same strategy and the same workforce.

In June, Australian Huawei executive David Soldani said the NBN had failed to reach its goal.

“The NBN project has failed and Australians need to stop expecting NBN Co to deliver high-speed broadband to all Australians – it is just not going to happen,” he said.

“Australia has somehow managed to invest $51 billion on a network that can't even deliver 50Mbps to around one million of its fixed-broadband end-user premises.”

He said Huawei had spent $10,000 for each activated premises on the NBN fixed wireless network, but hundreds of sites were delivering 6Mbps or less at peak-time - “worse speeds than many were getting on old ADSL services”.

And according to the competition and consumer watchdog, the ACCC, while NBN speeds are improving, there’s still a long way to go.

In its latest report, the ACCC found NBN speeds are improving, but warned that service providers need to be realistic in the speeds they advertise.

“We expect NBN Co and service providers to work harder together to help consumers achieve the speeds they are paying for,” ACCC chair Rod Sims said.

“We will be watching to see how companies respond to customers who aren’t getting the advertised speeds on their current plans, and we will act on misleading speed and performance claims made by providers.”

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