Fix up costly NBN mess, says report

THE National Broadband Network is a “uniquely Australian” mess of outdated technology, political tampering and rollout miscalculations, according to Standard & Poor’s.

And the Federal Government will almost certainly write down the value of the network as it abandons the theory it can “generate a commercial return on investment”, the ratings agency said.

In a blistering critique, S&P said a convoluted pricing structure added to the mire, and consumers were afraid to sign up to the super-fast plans, the great selling point when NBN Co started rolling out the network, because they did “not view them as affordable”.

It said the high prices charged to the telcos operating on the network jeopardised the economics of the $30 billion taxpayer-funded project.

The state of affairs was so poor that the telcos were in an “arms race” to expand their mobile networks as a means of bypassing the NBN.

The report, from a team of S&P analysts led by Graeme Ferguson, said changes were necessary to entice Australians to sign up at the desired rate.

“We believe NBN Co’s forecast take-up rate will be hard to achieve without a change to its wholesale pricing model,” he said.

A writedown of the NBN “appears inevitable”, S&P said, meaning the value of the network would be cut below the tens of billions of taxpayer dollars ploughed into it.

Mr Ferguson said NBN Co’s “unusually complex pricing model is part of the problem”.

“It is a contrived market shaped by heavy government intervention,” he said.

Despite this, the NBN was likely to help in “bridging the digital divide” between metropolitan and regional areas, the report said, “albeit at an enormous cost to taxpayers, subscribers and incumbent telecommunications providers”.