“I do not come into this job with a pre-ordained view or a particular agenda about NBN pricing.”
The comments signal Mr Fletcher’s approach as minister will be to leave the running of the project to NBN Co, the government company that has accumulated $19.4 billion in losses to build the network over about a decade.
Telcos have called on NBN Co to cut the wholesale prices it charges them for access to the network, which could see savings flow through to the retail prices paid by customers.
NBN Co charges $45 for connections with speeds of 50 megabits a second, which are the most popular plans and have been taken up by more than half the network’s customers.
Internet providers have said their retail prices must exceed $60 to $70 a month once other costs are added on, leaving little room for them to make a profit in a competitive market.
Telstra chief executive Andy Penn has called for wholesale prices to be cut by at least $20 a month.
But Rod Sims, chairman of the Australian Competition and Consumer Commission, has cautioned that the telcos’ priority was reducing pressure on profit margins and it was unclear how much of the saving would flow to customers.
Consumer advocates have also expressed concerns about NBN prices, saying quality internet connections must be affordable for lower-income Australians.
The NBN has been financed with $29.5 billion in government equity and $19.5 billion in government debt, while having access to another $2 billion in private-sector loans.
Mr Fletcher said this would be the “peak funding” for the project now that it had reached the point where 9.3 million premises could connect, up from 50,000 when the Coalition came to government in 2013.
While Mr Fletcher has the power as minister to direct the NBN Co board to take a specific action on prices, he played down this prospect.
“I’m not going to foreshadow how I use powers under the legislation governing the NBN,” he said.
“The company makes its own pricing decisions.”
Mr Fletcher comes to the position after long experience in the sector, having been an adviser to former communications minister Richard Alston and a senior executive at Optus before entering Parliament in 2009.
It is not a novel proposition that those who are purchasing services on a wholesale basis … argue that the price is too high.
“It is not a novel proposition that those who are purchasing services on a wholesale basis from others within the telecommunications industry argue that the price is too high and that there ought to be government or regulatory action to change the prices,” Mr Fletcher said.
“These things are timeless in many ways.”
Mr Fletcher dismissed the idea of a government decision to write down the value of the NBN equity investments or loans.
“I’m not going to speculate on that, other than to say it’s not a decision for government – it’s a decision for board and management in accordance with well-established accounting principles,” he said.
A write-down would allow the company to reset the financial return it must achieve, and therefore allow it to lower prices, but it would also force the lower value to be recorded in the federal budget.
The government has the discretion to forgive some or all of the value of the $19.5 billion loan to NBN Co, an option aired by some in the industry as a way to change the company’s financial targets.
Another option would be to change the terms of the loan to reduce the burden of repayments without a write-down of the value of the loan.
NBN Co recorded $1.3 billion in revenue in the six months to the end of December but posted a loss of $2.2 billion. The network is scheduled to be finished by 2020.
David Crowe is chief political correspondent for the Sydney Morning Herald and The Age.
Fergus Hunter is an education and communications reporter for The Sydney Morning Herald and The Age.