NBN hit by digital division

NBN hit by digital division, by Anthony Klan.

Consumers are simply bypassing the $49 billion network as new technology, such as 5G mobile broadband, becomes cheaper and more widespread.

The NBN had forecast it would lose out on about 15 per cent of connection to mobile broadband and wireless technology.

According to telco analyst Ian Martin of New Street Research, by June 30 last year that figure had already crept up to 17 per cent of the market — before 5G was even available — and mobile broadband and fixed wireless service would grow steadily to about 25 per cent of the market during the next five to six years.

That would wipe up to $10bn from the value of NBN Co and force the federal government to lump billions of dollars of debt tied to the scheme on to its already highly strained balance sheet.

“Just to service its debt and before delivering any return on investment, the NBN needs eight million customers each generating revenue of $52 a month,” Martin says. “In our view, they’re not going to get that number of customers and if wireless goes to 25 per cent of the market, then that competition means no one will be earning $52 in monthly revenue.”

The former Labor government, which launched the NBN in 2009, set up the network as a government-owned profit-making business, meaning that as long as it delivered a return, it could be kept “off the balance sheet” and would not add to the national deficit.

Labor’s forecast of a 7 per cent return from the NBN investment did not materialise, and even after the Coalition slashed costs by moving from the expensive fibre-to-the-home technology to fibre-to-the-node connections — which cost half as much — the project is struggling to deliver a return much above inflation.

Ownership matters:

OPENetworks managing ­director Michael Sparksman says NBN Co and the federal government were far less concerned about stamping out the practice [of companies installing shadow networks in apartment blocks] than he was.

“Quite simply, they don’t care because it’s not their money. It’s the taxpayers’,” he says.

“All they care about is hitting rollout targets, not about ensuring the taxpayer investment is protected.”

Yep. Like many, we predicted something like this would happen. Leave private business to private enterprise, to people who know the business better and whose own money is on the line. The government should simply have stayed out, and it would have been better and cheaper for nearly everyone. Sigh.

hat-tip Joanne