The Australian: NBN could cost $50bn, slow services take-up could affect viability

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Photo: Kainet/Flickr (Creative Commons)

The cost to build Labor’s National Broadband Network could top $50 billion by 2028, with a report by the government’s own advisers noting that slow take-up of potential services could “adversely impact” the NBN’s use and its revenue.

The report, revealed by The Australian (paywall) under Freedom of Information, was written by Greenhill Caliburn for the Australian Government to review the “robustness” of its 30-year plan. The advisers estimated that only 1 percent of Australians would have an internet-connected TV, 62 percent having broadband and 31 percent having a pay-TV service.

It also criticised the pricing model of the NBN, which is based on the amount of data carried. In addition, it warned of a “potential consumer pushback” because of the assumption that it could charge more to receive faster speeds.

The Government’s estimates that it will spend $35.9 billion on building out the network by December 2020, lower from the $43 billion estimate due to the deal with Telstra struck this year. However, the Greenhill Caliburn report notes that the Government will need to spend $14.7 billion in order to “future-proof” the network.

Malcolm Turnbull, the Opposition’s Communications spokesman, told the Australian, “The revelation that the NBN will spend $50bn on capex by 2028 will not surprise most industry experts who regard the company’s capex forecasts as extremely light on.”

He was also critical of the business plan, saying the “whole business case is premised on the very rapid take-up of high definition video and entertainment services”.

Communications Minister Senator Stephen Conroy’s office defended the NBN, telling the Australian that it would deliver “significant benefits to all Australians” in health, education and opening business opportunities. NBN Co also defended the project, with a spokeswoman telling the paper that the NBN would be beneficial to small businesses.

“There are two million small businesses registered in Australia, many of them operating from home. We believe they will be key beneficiaries of the NBN,” Rhonda Griffin, NBN Co spokeswoman, told The Australian.

She also rejected the conclusion that the NBN was purely for entertainment purposes.

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