Revelations that a recent $750 million upgrade resulted in a paltry 100 customers have raised speculation that a Liberal-led coalition – should they win the upcoming federal election – may move to privatise the National Broadband Network (NBN), which is $26 billion in debt.
It’s understood that recently completed NBN upgrades to Australia’s remaining national fibre-to-the-node (FTTN) network supplemented $800 million of additional NBN Co funds to provide higher internet speeds for around 622,000 additional premises by 2030.
However, in the past 12 months more than 1000 customers have also ditched the NBN service due to higher costs and speeds that don’t compete with world standards.
With an average speed of 78 Mbp, Australia’s internet speeds are ranked 55th in the world.
Nevertheless, the NBN is understood to have raised its prices by 14% in the last eight months alone.
Election issue
This outcome has ignited calls from Vodafone TPG, NBN’s second-biggest customer for the millions of dollars the NBN receives from commercial telcos to subsidise its service to be abandoned.
Opposition communications spokeswoman Melissa McIntosh believes recent NBN upgrades raise serious questions about the Albanese government’s capacity to deliver on major projects.
Meanwhile, Communications Minister Michelle Rowland has accused the opposition of planning an NBN selloff if it gets into office.
“Australians have a clear choice: a publicly owned NBN under Labor that continues to invest and keep prices affordable. Or a privatised NBN that cuts regional investment and jacks up prices under (Peter) Dutton,” said Rowland who expects a Labor government to continue investing in the NBN.
However, future funding of the NBN is shaping up to be a major election issue, with Labor leader Anthony Albanese committing an additional $3 billion to the state-owned telco in January.
The fixed wireless service was pitched as an alternative to NBN Co’s satellite offering, Sky Muster.
However, customer preference for superior connections from competitors like Elon Musk’s Starlink has seen 20,000 customers abandon Sky Muster in the past two years.
It’s understood the recommended retail cost of a Starlink (satellite internet) router is $549, with a monthly service fee similar to an NBN plan.
By comparison, the $3.8 billion spent upgrading 622,000 homes equates to about $6100 per premises.
To put this expenditure in context, it’s 12 times the cost of an existing alternative that has been funded by taxpayers’ money.
Slow telco uptake
Meanwhile small telcos like Tangerine, More, Activ8me, Aussie Broadband, Leaptel and Superloop have not been quick to offer the new wireless service.
However, major retail service providers including Telstra (ASX: TLS) and TPG Telecom (ASX: TPG) have confirmed they will be making new NBN Fixed Wireless High-Speed Tier products available later this year.
According to recently released Australian Competition and Consumer Commission (ACCC) data, overall growth in NBN wireless and broadband service customer numbers has plateaued at around 404,114 and 8.8 million respectively.
As of 31 December, NBN Co has received $31.1 billion of cash investment from taxpayers while accumulated lifetime losses exceed $35 billion.
Some independent estimates value NBN at around $13.6 billion with an internal rate of return of 0.3%.
At the end of December last year, NBN had $59 million of cash and for the six months prior, it recorded an average monthly loss of $135 million.
