The NBN is a mess

The NBN is a mess, by David Leyonhjelm. The left just has to meddle in markets, thinking they know better:

In the time before Kevin Rudd, what customers were willing to pay determined our internet speeds, the technologies employed and the companies that wanted our business.

Then we had Kevin 07. He promised fast, affordable internet speeds for everyone, delivered by a new wholesale internet company owned by the Government, using fibre-to-the-premises technology in towns and cities. The total cost to the government was going to be $4.7 billion [no, that was just for the backbone upgrade — the initial net cost estimate was $26 billion].

A trailblazing government monopoly to replace the chaos of the market – it was all so simple. It was amazing no one had thought of it earlier.

But then Telstra was paid billions to never compete with the NBN, an early sign of trouble. If the NBN was going to be so good and affordable, why did it need to eliminate potential competitors? Fairly obviously, the Government wanted everyone to sign up to the NBN so that their financial projections looked more credible, like a despot eliminating other candidates and ‘encouraging’ voters to vote before claiming a landslide election victory.

By the end of Labor’s six years, less than seven percent of the population could access the NBN, and it was estimated that its final cost would exceed $70 billion. …

The coalition trimmed the NBN, but no more.

The new government (with Malcolm Turnbull as Communications Minister) decided writing it off was too difficult and in any case the NBN wasn’t such a bad idea. It said it would build it cheaper and faster.

So fibre to the premises and 1 Gb per second speeds [no, actually Rudd promised 100 Mbps] were replaced with everyone having at least 25 Mb per second no matter where they are located in Australia. In the cities the technology would be fibre to the node, greater use would be made of fixed wireless in towns, and satellites would be used for everywhere else. The fastest speed was dropped to 100 Mb per second.

According to the latest figures the cost of the NBN is estimated at $49 billion …

The cost of $49 billion is $4,900 per household. If the government did nothing, but let the market gradually advance, most of us would likely have NBN-like speeds without that expenditure. Our house has Telstra cable, which initially ran at 12 Mbps in 2009, but after a couple of speed bumps is now over 100 Mbps — and all at $100 a month or so during the entire period. But Telstra were paid billions not to compete with NBN; lucky we happened to get it before that. And wireless technologies now increasingly run at NBN like speeds — no NBN required.

Now we are stuck with a government monopoly — anyone remember the PMG?

Unless something changes the NBN will result in higher taxes, higher internet charges and poor service. Reminiscent of Telecom in the bad old days, it will display the typical characteristics of a government monopoly. Not being a private business, it lacks the imperative to pursue profit, offer good service at low prices, or limit borrowings by funding capital expenditure from cashflow. … There is no way of unscrambling the egg.

The NBN is compulsory, and often makes your service worse. Commenter mareeS:

Having been forced over to NBN, having lost our former landline phone number that all family and friends have known for 30yrs, having now a speed well below our former ADSL2+ After 6 weeks of chaos, and now at a cost of more than 25%+ for a vastly inferior service, who can I sue? This is the pits.

hat-tip Matthew