How Much Has The NBN Really Cost Australians?

Image: Getty Images

It's hard to imagine a public infrastructure project that has been more divisive than the NBN. In its earliest days, critics said there was no need for a 100Mbps network, that the proposed fibre to the home technology would be outdated by the time the project was complete and that we simply couldn't afford it.

On the other side were those who said we'd need the NBN in order to compete globally and to access new services as the internet became the network we all rely on. Well, we are where we are and as the project nears its conclusion, it's a good time look at what the NBN has cost and whether it has delivered a network the country can rely on.

What has been the real financial cost of the NBN?

There's a solid analysis, provided by former stockbroker and journalist Michael West, that looks at the project cost and the impact on a number of carriers.

The TL;DR is that Telstra's share price has fallen from around the $6.50 mark to under $4.00. AGL has walked away from a proposed purchase of Vocus with that carrier's value plunging by $3B from its $5.6B peak in 2016. TPG has lost about the same in value with just those three companies having a combined loss of about $38B during a period when the ASX200 has gained 15%. And Singtel/Optus has dipped by around 36% as well - although the full value of that loss is harder to assess.

I don't agree with West's assessment that all of that is the result of the NBN. There's evidence that customer service levels have fallen at Telstra and there are hundreds of RSPs servicing the NBN market which means customers are spread further across more providers.

Throw in the approximate build cost of at least $50B and as the USA's Secretary of the Treasury once said, a billion here and billion there and pretty soon it starts to look like serious money.

It's easy to make the argument that the NBN will cost close to $90B once it's complete by the time you take into account the impacts on providers and the build cost.

If the NBN has actually graced your area with its presence and you're looking for a plan, here are some ones worth considering.

NBN 100

NBN 50

Never mind the cost - are we getting a great network?

I speak to a lot of people from different walks of life. Some of them are fans of the vision of the NBN, others only see the costs and few benefits for them. Aside from a few friends that were lucky enough to get a fibre connection all the way home during the first stages of the rollout and one who paid $6500 for a fibre to the home connection, I'm not hearing a lot of happy stories.

When we look at the data comparing Australia to the rest of the world, the news isn't good either. As I've reported before, our average speeds are improving but many other countries are pulling away. We're getting faster, but they're getting faster, faster than we are.

For those who have suffered through crappy ADSL connections over the years, the NBN should have guaranteed a massive speed improvement. Instead, there are many who can't get a connection that exceeds 25Mbps because the crappy copper that inhibited ADSL is the same crappy copper connecting them to an NBN node.

Image: Twitter

I've moved house three times over the last five years or so. Near the top of my list for a home was "Not ADSL". Fortunately, I've been able to find homes with HFC cable connections and been able to get 100Mbps downloads although the 2-3Mbps uploads have been a pain to deal with.

The NBN has arrived in my neighbourhood, but I'm sticking with what I have until I'm certain I'll get an equivalent service for the same price or less than I'm paying now.

In short, we're getting a better network, but it's not a great network.

Who's to blame?

We can point to NBNCo's pricing structures, or the way RSPs over-promised performance they didn't really have control over or even the composition of the NBNCo board and management. But my root cause analysis of the NBN points to one major factor.

Government policy.

Both Labor, when they proposed the NBN, and the Liberal-National Coalition when they inherited the project after the 2013 election messed up on policy.

The first mistake was making the project technology-centric rather than outcome-focussed.

When Labor's Minister for Telecommunications, Stephen Conroy, announced the NBN a lot of attention was given to the deployment of an all-new fibre optic network to every home. By putting the technology front-and-centre, he created an easy target for critics.

When the Coalition came to power, Tony Abbott and his team were able to pick apart the technology decision with ease. Anyone who has been in a management or board meeting proposing a technology project knows how easy it is for someone to pick on a specific technology.

The project should have been governed by

  • A budget based on the economic value of fast, ubiquitous broadband
  • A definition of the minimum speed (download and upload) the network must deliver
  • A time line

That's it. The project should have been technology agnostic and focussed on actual requirements rather than being defined by technical solutions.

The result of these policy failures has been significant. We now have a network where performance is governed by your postcode and that has the countries we compete with for talent and business moving ahead.


Comments

    $90B and it's almost redundant for SOHO users thanks to the inevitable improvements in wireless technology (such as 5G). I get it for backhaul and the big end of town but NBN is closer to ancient history for the general consumer than it is being the future proof economic incubator it was once (not that long ago) touted to be.

    What really annoys me is that this was sold to the public as self funding because there would be an asset worth selling to private enterprise at the end. You'd be a moron to pay anywhere near $90B for this. I'd go as far as to suggest you'd be losing money if you paid $9B for it...

    Who is accountable? No one...

    $90B is about $3,600 for every person in Australia. I'm on wireless broadband (4G) now and it serves me and my family fine. I doubt I'll ever use the NBN directly... someone else can pay for my bit now that I'm a shareholder...

      Yeah, the self-funding model only works with FTTP, and substantial investment in innovation and decentralisation... as soon as they started watering it down they should have canned the lot and put the entire budget into wireless tech.

      Its the old... where was that CBA you were asking for Malcolm *rolls eyes*.

      5G is not a viable replacement as a home internet connection for an entire country.

      It is mind boggling that people still believe in stupid things like this.

        Reply not required - the moron has spoken (but I'll enjoy replying all the same). Great to hear from you DJ barren... and one day I'll even read one of your posts that actually contributes in a meaningful way. I live in hope.

    Elon musk's satellite mesh will only cost 1/5th of 90 billion, giving whole world 100mbs speed.
    what are we missing here ? A huge scam miss represented as incompetency of govs!!!!!

    It was a technology project, the type of technology used was core to the project.

    The use of copper and FTTN has been the greatest wasted opportunity of a generation.

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