NBN shaping up as costly exercise
THE National Broadband Network is a “uniquely Australian” mess of outdated technology, political tampering and rollout miscalculations, Standard & Poor’s says.
And the federal government will almost certainly write down the value of the network as it abandons the theory that it can “generate a commercial return on investment”, the ratings agency says.
In a blistering critique of the project, S&P says a convoluted pricing structure adds to the mire.
Consumers are afraid to sign up to the super-fast plans — the great selling point when NBN Co started rolling out the network — because they “do not view them as affordable”, the agency says.
In a new report, it says the high prices charged to the telcos operating on the network jeopardise the economics of the $30 billion taxpayer-funded project.
And the state of affairs is so poor the telcos are in an “arms race” to expand their mobile networks as a means of bypassing the NBN, it says.
The report, from a team of S&P analysts led by Graeme Ferguson, says changes are 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 stepchange to its wholesale pricing model,” Mr Ferguson says.
Telstra has previously criticised NBN Co’s pricing, arguing it is impossible to offer customers cheap plans because wholesale prices are too high.
A writedown of the NBN “appears inevitable”, S&P says, meaning the value of the network will be cut to a tally below the tens of billions of taxpayer dollars ploughed into it.
Industry analysts have previously speculated billions of dollars will be written off the value of the network.
Mr Ferguson says it is “getting harder for the government to stand behind the presupposition that NBN Co will generate a commercial return on investment”.