Government paying 'outrageous' sums to Telstra for NBN: Vodafone CEO

The "outrageous" size of NBN payments to Telstra is one example of the number one telco's unfair advantage, according to Vodafone CEO Inaki Berroeta.

In a keynote today at a lunch hosted by the Trans Tasman Business Circle, the new CEO of the country's number three telco said policymakers must level the regulatory playing field to boost telecom competition.

"Australia needs to have a strong Vodafone ... because it is good to have strong players in the market to promote competition," Berroeta said.

"What I will do is make sure that Vodafone is a strong player in the market. What I would ask the policymakers is to do a little bit of work to create a level competition playing field so we can do this together...

"It's not about more regulation. It's about good regulation."

Policymakers should ensure that public funding of networks does not create an "imbalance in the market," Berroeta said.

In particular, he criticised the $20 billion over ten years that the government will be making to Telstra for NBN infrastructure.

"This is an outrageous amount of money, and we need to make sure it doesn't create any imbalance," Berroeta said.

"When you buy something, you need to pay what it's worth," he said. "This is like if you need if you need a car, and you buy a car, and you pay 10 times the value of the car, it doesn't make sense."

As another example, the CEO noted that Telstra has been receiving a large amount of public money under the Universal Service Obligation (USO). Universal service is important for reaching regional areas, he said, but it's important to make sure that the funding does not give the incumbent telco an unfair advantage over competitors.

In addition, policymakers should ensure all market players have equal access to wireless spectrum, he said.

Berroeta said he sees opportunities for Vodafone in the NBN. Vodafone wants to use the NBN as backhaul for its mobile services because current transmission prices set by Telstra are too high, he said.

"Vodafone Hutchison Australia will pay [Telstra] close to 6 per cent of revenues on transmission. This is more than three times what a normal company would pay outside of this market."

NBN "opens an opportunity for many players to leverage on that infrastructure," he said.

Berroeta said he is optimistic about Vodafone turning its brand around, even though customer numbers have continued to fall.

Enhancing customer service will play a key part in Vodafone's turnaround, he said. The telco has also committed $1 billion this year to its network, including an upgrade of its IP core, he said.

"Vodafone has been losing customers ... but the reality is that the business has been transforming," he said.

"We don't want to flood the market with SIM cards and report numbers. That is not really what Vodafone is about. We really want to make something that is compelling for the customer, something that is different, something that brings new value ... and then the numbers will come."

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

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