Thursday, November 27, 2008

KPN versus Telstra: driving volumes versus prices

KPN's FTTH proposal and Telstra's NBN bid couldn't be further apart. It's open access thinking (driving utility rates and thus volumes) versus denying that telecoms is a volume business (charge as much as possible for the service). Of course, it's also FTTH versus FTTN.

Let's hope the Australian contenders (Optus/Terria, Acacia, Axia NetMedia) will be able to put aside their differences and join together. After all, they are all open access aficionados as well.

Telstra is looking to charge 30 AUD/mo for a 1 Mb/s connection. How does that compare to KPN? We will have to make some assumptions. Take a look at the layered network:
  • Passive: to be regulated. Wholesale prices: 12-15 EUR/line/mo (capped at 14.50-17.50 EUR/line/mo, and subject to CPI corrections), excluding VAT. This all derives from the current Reggefiber pricing.
  • Active layer: no regulation, but price discrimination is not allowed.
  • Services: digging around at OnsNet Nuenen, OnsNet Eindhoven and GNA (Amsterdam) should provide an idea of where retail prices may end up, since they are each munifiber projects with Reggefiber involved. A triple play costs anywhere between 45 and 125 EUR/mo. A wide margin, but the high-end is somewhat of an outlier. KPN so far has more expensive triple play packages available: 65 EUR/mo, which includes a 30/3 Mb/s connection, and all the way up to a very asymmetrical 60/6 Mb/s service for 110 EUR/mo. This grants KPN some room to drop its prices once the service is launched nationwide.

It looks like triple play retail pricing will be in the 45-65 EUR/mo range, with KPN probably using its brand to charge tariffs at the upper end. Still a great deal compared to Telstra's very expensive single play.

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