Cost of NBN to small ISPs "insane": Internode's Hackett

Internode's boss says ISPs with less than 250,000 customers will be all but wiped out

Internode boss Simon Hackett has delivered a heavy critique the costing model proposed for the National Broadband Network (NBN), stating that small ISPs will be all but wiped out under the current NBN arrangements.

The ISP's managing director, speaking at the Commsday Summit in Sydney, said the complexity of the costing model might deter smaller ISPs from participating in the NBN, due to a large number of customers being needed to keep it viable.

“Why has it been measured against 250,000 customers?” he said. “It turns out the NBN Company use that size across a number of examples and don’t use numbers smaller than that.”

Hackett said the cost of the NBN to smaller ISPs would be “insane” and that these groups would be disadvantaging their customers if they chose to sign up to the NBN.

"At 10,000 customers, it’s insane to connect these customers to your network...if you drill in a bit, the same thing [will happen for ISPs with] 10,000 to 100,000 customers.”

Hackett said hundreds of ISPs will be affected by the 250,000 customer business model, with only five ISPs being able to meet this number at a national level.

“Anyone smaller than us cannot survive attached to the NBN - it’s not complicated, it’s just the math,” Hackett said.

“It’s not part of the rhetoric we hear about the NBN...so five [ISPs] is a really interesting number.”

In an industry he described as needing to “squeeze out costs in order to survive”, Hackett said ISPs with less than 250,000 customers would need to migrate across the "valley of death" between now and 2021.

“[The NBN costing model] presumes that 250,000 customer ISPs will just appear from nowhere,” he said. “That steady state doesn’t happen until 2021. We have to migrate from being here to get to the other side.”

Hackett said last years intervention by the ACCC in the development of the pricing model, may have caused NBN Co to abandon rural areas, with an unplanned increase in costs first and foremost affecting those remote customers of the NBN.

“If you’re stuck for cash, you abandon the bush,” he said. “You don’t sell services regionally, they cost more...it’s that ACCC decision that will force regional costs up again.”

While Hackett said the NBN Co's pricing model, which he said is based on Telstra's wholesale model, had its flaws but he didn't think the organisation had deliberately set out to disadvantage smaller ISPs.

“This Telstra wholesale model is deadly... the model is actually a bit broken. It works in entry-level download speeds, but when taken out of that corner the costs creep up,” he said.

“The NBN guys didn’t mean to do this... I think they just copied a model that they knew.”

Hackett’s insights come as shadow communications minister, Malcolm Turnbull, earlier this week warned that NBN Co will be given “enormous power” under amendments to key legislation passed in the Senate late Friday.

Follow Lisa Banks on Twitter: @CapricaStar

Follow Computerworld Australia on Twitter: @ComputerworldAU

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags Simon HackettCommsday Summit 2011internodeISPNBN

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Lisa Banks

Computerworld
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?