NBN usage fee will burn consumers: iiNet

The nation’s third-ranked broadband provider iiNet has warned that consumers could be slugged higher internet access charges unless the company building the national broadband network (NBN) drastically reduces the cost of its contro­versial usage fee.

Describing the NBN usage fee as a “tax on consumption”, iiNet chief executive David Buckingham said the charge needed to be reduced.

“This usage charge is hurting us,” Mr Buckingham told The Australian. “It’s a tax on consumption and if it continues we will have no choice but to recover that cost.”

The usage charge is paid by ­retail service providers such as iiNet and Telstra for a chunk of capacity to carry data through the NBN and is on top of a monthly connection fee that ­providers pay for each user they connect.

NBN Co is considering ways to overhaul the controversial charge, but no final decision has been made.

“We want our customers to enjoy the NBN speeds and use more content, but when we can deliver that content at a tenth of the cost then where’s the incentive to move our customers to the NBN?” Mr Buckingham said.

His comments came as iiNet cracked the $1 billion revenue mark for the first time.

In the 12 months to June 30, iiNet added 40,000 broadband subscribers to help push profit to $65.8 million on the back of a 7 per cent increase in revenue to $1.006bn.

iiNet now has more than 40,000 subscribers on the NBN, half of which were new additions in the past 12 months.

But for iiNet to continue to capitalise on new broadband growth, Mr Buckingham said, the government had to get on with its job of rolling out the NBN.

“I am sick of waiting,” Mr Buckingham said. “They need to speed up the operational rollout, speed up negotiations … and they need to unleash the plan they have put in front of us.”

iiNet said it now controls a 20 per cent market share of all NBN services, comprising a 26 per cent share in greenfield areas and 19 per cent in brownfield sites. By moving off-net customers (those connected to Telstra infrastructure) on to the NBN, Mr Buckingham said, iiNet was able to increase its margins and revenue.

However, the company was losing money when it transferred its on-net customers (those connected to iiNet infrastructure) to the NBN.

Improving the margins of its broadband customers has seen earnings at iiNet increase 9 per cent to $196m. That means the telco’s earnings are growing ­faster than revenue.

iiNet’s revenue from corporate and business customers also showed strong signs of growth, revenue for the division increasing 11 per cent to $204m.

The company declared a fully franked final dividend of 13c a share, making a total dividend for the year of 22c, up 16 per cent on the previous year.

This article originally appeared in The Australian.