VHA wary of NBN customer lock-in

While offering neither fixed line calls or fixed broadband services, Vodafone Hutchison Australia (VHA) believes the National Broadband Network (NBN) will still deliver the telco an increase in business.

Speaking at a joint committee hearing on the NBN, Mathew Lobb, general manager industry strategy and public policy at VHA said the national network presented two major opportunities: fixed lines services and an enhanced mobile offering.

“We see that having more fibre in the ground is certainly going to benefit the wireless capability and we see significant opportunities for backhaul capability and base station backhaul top the points of interconnect and that would significantly enhance our wireless operations and that is a very important part of our participation in the [NBN mainland] trial ” he said.

Commenting on NBN-related challenges, Lobb said VHA felt that managing the decade-long migration of customers to the NBN required close and skilful management, including government informing consumers of the changes and their choices.

“[The migration] will be a period of potentially significant change with over 10 million customers moving from copper to fibre and that will have significant operational and customer information challenges,” he said.

“The last time something of this magnitude occurred was in 1997 with the opening up of copper access and there was a significant period of quite substantial customer confusion and that didn’t lend itself to a good reputation for the industry.”

Lobb added that it was also important that adequate regulatory oversight of Telstra during the migration period be provided.

“It is a period where Telstra still maintains its copper dominance and it is important that during that period there is appropriate oversight,” he said.

“The SSU (Telstra structural separation undertaking) does have its problems… our main concern is that it does not give us comfort that there is an appropriate amount of separation between the wholesale and retail businesses.”

By way of example, Lobb said that Telstra Corporation still retained the pricing approval process for both retail and wholesale arms of Telstra.

Commenting in the customer acquisition strategies of retail service providers during the migration period, Lobb said it was likely that customer lock-in would be a feature.

“We believe that during that period of migration there will be quite a lot of market behaviours about locking in customers with deals that consumers may regret…. That is competition – there is a cut and thrust and part of commercial life – but if that is done in a way that inhibits competition and consumer choice then we would have concerns,” he said.