Vocus CEO hits out at NBN 'monopoly' as election looms

With just over a fortnight to go before Australia’s next parliamentary election, the head of Aussie telco Vocus has made his feelings clear on the country’s state-owned broadband network.

Kevin Russell spoke at the CommsDay Summit in Sydney on Tuesday, delivering an address that largely focused on his company’s recent turnaround project, its takeover by Macquarie Asset Management and Aware Super, and its plans for the future, particularly from an infrastructure point of view. But while Vocus’s ambitions will see it spend in areas including subsea cables, fibre, cybersecurity and LEO satellite systems, it is concerned about the impact NBN will have on its ability to invest.

“We are three weeks out from an election – the first election following the formal completion of the NBN rollout,” Russell said, according to a transcript of the speech shared by Vocus. He reminded his audience of NBN’s chaotic start, albeit not in those exact words, its form and focus changing according to the wishes of whichever major party was in power.

The current government, led by Liberal PM Scott Morrison, is focused on maximising the value of the NBN investment, rather than promoting private infrastructure investment, Russell noted.

“As a consequence, we now have a market where a government-owned monopoly receives taxpayer funding to compete against alternative private infrastructure – and where competitive private operators are directly taxed to subsidise this monopoly,” he said.

“We’ve seen consistent ‘mission creep’ into competitive markets throughout the NBN’s existence, but particularly in recent years. As an example, NBN’s latest mission creep into third-party data centre facilities, an existing competitive market, has a direct impact on how we at Vocus think about investing in new fibre,” Russell warned.

Vocus lobbed the accusation of mission creep at NBN Co at the back end of last year, when it proposed plans that would see it connect businesses directly with third-party data centres. Tuesday’s event in Sydney simply gave Russell a new platform from which to bring it up again at a particularly timely moment, given that the election is slated for 21 May.

“A government monopoly pushing into contestable markets can only have a negative impact on private infrastructure investment,” Russell said, before making a plea to whoever wins this month’s election:

“Please, we cannot afford another narrow, short-term, unsustainable NBN focused policy – instead we need a balanced strategic industry policy that promotes sustainable competition, prioritises private infrastructure investment, and embraces the deployment of new technologies which can uplift our country’s digital capability.”

His stance is wholly unsurprising, given Vocus’s position as a network-builder. But it is also true that NBN has strayed somewhat from its initial remit of being Australia’s wholesale national broadband network. NBN has been a political football since it was first conceived, and it is therefore to be expected that it will continue to serve as such in this upcoming election…for some interested parties at least.

Aided by its new owners – Macquarie Asset Management and Aware Super took over and turned it into a private company nine months ago – Vocus is part-way through a five-year, A$1 billion investment plan, including hefty spending on cable, fibre and satellite infrastructure. It is also working on the structure of its business, both at home and overseas.

Its New Zealand business Orcon is due to merge with 2degrees on 1 June, having just got the green light from the Overseas Investment Office, and the company is preparing to spin off its retail business in Australia with a view to a possible sale or IPO in future. Funds raised by the latter would help support Vocus Network Services and that five-year plan.

It’s all go for Vocus. Shame that pesky NBN keeps getting in the way.