JB Hi-Fi CEO & Former Telstra Retail Boss Talk NBN Retail Plan

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EXCLUSIVE: The new CEO of JB Hi-Fi, Terry Smart, has said that the Federal Government is “crazy to even consider” allowing the operators of the National Broadband Network to move into retail, while the former MD of Telstra’s retail operation, David Moffatt, claims that no one has to worry until the final draft of the proposed legislation is seen on 9 March.

Under the current drafting of the proposed legislation that is set to go before the lower house on 9 March, Communications Minister Senator Stephen Conroy is advocating that the NBN Co be given the power to move into the Australian retail market, selling retail products up against mass retailers, as well as carriers like Optus, Telstra and Vodafone.

Moffatt claims that while the NBN Co has some smart people working for it, retail will be “difficult and expensive”.

“No one really has to really worry until we see the colour of the final bill. However, if there are some self-evident points of concern, the carriers will respond. If the Government says to all of the wholesale traffic providers, we are going to build something and you are going to have to come to us, and they want to advantage themselves by selling a product at a retail level, this is going to cost them a lot more money than what is currently being proposed,” said Moffatt.

He added, “The retail concept is then going to have to go before the NBN shareholders and be signed off by the Federal Government. If this becomes reality, the wholesale carriers are then going to have the option of taking their business elsewhere or they could strategically choose not to play ball with the NBN. It is still early days and there is still a long way to go. If they do go into retail, it will be extremely tough for them to compete,” he added.

Speculation is also mounting that former Telstra Group Managing Director Holly Kramer is currently talking to NBN executives about a retail role. A former Ford executive, Kramer quit Telstra suddenly late in 2009 after a trip to HTC in Taiwan. She was recently seen visiting the NBN Co offices.

 

According to Terry Smart, who earlier this month was appointed to the CEO role at JB Hi-Fi, the move by the Federal Government to even consider moving into the retail market is strange. “Even if they did get retail off the ground, the vendors are not necessarily going to want to deal with them. They all have established relationships and they are not going to want to put those at risk. To even consider moving into retail is crazy,” he said.

He added, “They are going to find it extremely difficult to set up a retail channel, let alone run it profitably. This strategy could end up costing them a lot of money.”

Currently the Government is projecting a cost of around $43 billion to build the new NBN. Under the draft legislation, Communications Minister Senator Stephen Conroy will have the discretion of allowing the NBN Co to become a government-owned retailer of telecommunications services, particularly for government departments and agencies, in direct competition to Telstra.

NBN Co has also floated a proposal to take over all satellite broadband contracts from retail service providers delivering subsidised satellite services under the Australian Broadband Guarantee scheme.

Under the scheme, NBN Co would become the sole provider of wholesale satellite capacity, which it would then on-sell to retail service providers.

Most current services are supplied by IPstar and Optus.

The ABG is a government subsidy of up to A$2750 for ISPs to provide a metropolitan-standard Internet service to remote areas that can’t connect to ADSL or 3G.

Meanwhile, Exchange says NBN Co has begun the process to provide a long-term solution to broadband for remote areas, which could see new satellite services by 2014.

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