commsday 2016: iboss' rene sugo
TRANSCRIPT
How to make the nbn™ business case work
Rene Sugo CEO – MNF Group
• Media & politicians driving a ‘simple’ agenda– Fibre vs Copper, fibre is superior (Labour)
– Multi technology is cheaper (Liberals)
• It’s much more complex than this!– 121 POIs barrier to entry
– Regardless of technology, CVC model leads to contention
– Expected speeds not economical to deliver
Fibre vs Copper
Great expectations
Consumer expectations
Cannot be done with CVC model!
Superfast &
affordable
$50-60/monthVideo on demand
Politicians MarketNetflix Effect
The effect
http://exstreamist.com/report-we-spend-more-time-watching-netflix-than-reading-eating-or-having-sex/
Netflix Eating Reading Chores Childcare Shopping Religious activitires
Sex0
10
20
30
40
50
60
70
80
90
10090
70
49
3325 22
82
Average minutes spent on daily activitiesM
inut
es
• Netflix reached 8% of Australian homes
– 1.89 million people July 2015 1
• Over 1 in 3 Australian households now have some form of pay or subscription TV 1
• Looking to the future…
– By 2020, 1 in 3 households will probably simultaneously watch streamed content
– Consider impact of 4K video
– Virtual reality / dual 4K streams
The effect
1 http://www.roymorgan.com/findings/6389-netflix-expands-market-foxtel-steady-australia-pay-tv-svod-july-2015-201508102349
The effect
https://help.netflix.com/en/node/306
AVC CVC RSP
Date Speed Cost(regulated)
Busy Hour (minimum user
experience)
Cost Per Mbps
(regulated)Total CVC
CostTotal Cost AVC + CVC
(Ex GST)
SRP(includes $28
margin1 + GST)
Political Expectation
RRP1
2016 (standard) 12/1 $24.00 1.5Mbps $17.50 $26.25 $50.25 $86.08 $66
2018 (SD quality) 12/1 $24.00 3Mbps $17.50 $52.50 $76.50 $114.95 $66
2020 (HD quality) 12/1 $24.00 5Mbps $17.50 $87.50 $111.50 $153.45 $66
2025(Ultra HD, 4K) 50/20 $34.00 25Mbps $17.50 $437.50 $471.50 $549.45 $66
Netflix recommended speeds Vs CVC
1http://lpa.webcontent.s3.amazonaws.com/NBN/The%20Coalition%E2%80%99s%20Plan%20for%20Fast%20Broadband%20and%20an%20Affordable%20NBN.pdf
Reality check
NBN Corporate Plan 2016
Source: http://www.nbnco.com.au/content/dam/nbnco2/documents/nbn-corporate-plan-2016.pdf
“…continued double-digit growth in volume through changed consumer behaviour (e.g. new subscription video services, 4K streaming, devices per household, etc.) and higher speed tiers is delivering significant upside for CVC.” – NBN Corporate Plan 2016
2015 2016 2017 2018 2019 20200%
10%
20%
30%
40%
50%
60%
70%
11.70%
30.90%
39.90%
53.90% 52.40%
61.40%
NBN ARPU earned from CVC charges
NBN Business Case Under Threat• Mobile data as NBN bypass
– Prices likely to stay steady– Data inclusions will increase
• NBN prices rise as usage & CVC increases• Smaller RSPs will need to increase prices• Mobile data could become cheaper than
NBN• More and more consumers go “Mobile
only”
NBN RSP Prices go up
NBN Bypass Becomes Cheaper
Consumers Move to NBN
Bypass
Less Consumers Share Cost of
NBN
NBN Usage Based Pricing
• Government intervention required
– Write off part of NBN build cost
– Remove dependency on CVC revenues
• Or risk creating industry oligopoly
– Small to mid size RSPs disappear
– NBN bypass services become dominant
– NBN business case failure
It’s not too late
…act before the CVC bus leaves the station too
2015
Thank youFor further information please contact:
Rene Sugo, CEO, MNF Group
(02) 9994 8590
Did we mention our awards?