How to fix NBN: take your pick

How to fix NBN: take your pick, by Alan Kohler.

The basic reason the National Broadband Network has gone pear-shaped — if not the full ­pancake — apart from the fact there’s copper at the end of it ­instead of fibre, is that the business has two conflicting mandates from its owner (us): to service everyone in the country and make a profit.

Can’t be done. Australia is too big, the distances too great. As a result, there are only three ways to make it work from here (tick one box please).

  • Allow NBN Co to be a loss-making service utility like the railways.
  • Take a big writedown so the capital base properly reflects the revenue potential.
  • Carve out the unprofitable remote areas from NBN’s business and directly subsidise them.

The review of the NBN by the Australian Communications and Media Authority announced next week will reach the same conclusion and will probably ­report that only the last of those options is realistic. …

Unless there is some circuit-breaker, Australia’s great step into the new world of fibre broadband will remain a mess.

Customers will continue to be confused about the plans and ­dissatisfied with the service, and everyone in the industry, NBN Co included, will struggle to make money.

The only good thing about what’s going on now is the price war that’s raging as newcomers go after Telstra. It’s not great for the shareholders of those companies, who have lost billions over the past 12 months, but it’s great for ­customers.

Except it’s lost on them because the NBN is too slow, the service is poor and the pricing too complicated and still too high.

The fault lay back at its genesis, on the back-of-the-envelope plan hatched by Rudd and Conway, on their socialist impulsiveness. Spending $5,000 per household to interfere in a market where market-driven improvements were financed organically out of regular monthly fees was always going to be a loser. And so it has transpired, even though Kohler thought the NBN was the ants pants for a while, and doesn’t sheet home the blame all the way to where it belongs — yet.