Last month, the NBN reported that it “continues to bleed” cash as revenue targets remain elusive:
In its third-quarter results, released on Monday, NBN Co announced revenues of $2 billion but a net loss of $3.4 billion for the nine months to March 31, bringing accumulated losses to $20.7 billion over the NBN’s entire 10-year lifespan.
While the loss was expected, NBN Co revealed its average revenue per user (ARPU) per month was still way behind the target necessary to deliver a return on investment and remain a commercial operation.
Now, NBN Co has opened the door to lowering its wholesale prices in a bid to make broadband more affordable and encourage more customers. From The Australian:
Mr Whitcomb said NBN Co was striving to find the right balance between meeting its economic objectives while ensuring telcos and consumers get the right value.
Wholesale prices are critical to NBN Co’s stated target of delivering an internal rate of return of 3.2 per cent and lifting its average revenue per user from $45 to $51 by 2022.
“When you are dealing with a wholesale/retail model, you expect retail service providers to put pressure on us to deliver value at a lower cost and that’s something we aspire to do,” he said.
“A big part of the consultation process is to find the sweet spot … we are going into this with an open mind.”
The NBN’s business model is clearly in deep trouble. The network is coming under increasing pressure to lower its wholesale prices, which would adversely impact revenue and could force a write-down of the value of the network.
If a write-down does occur, the cost to taxpayers could be as much as $20 billion, according to industry experts.
This is a cost that might be worth bearing, given delivering Australians a competitive and reliable internet service is a must. Australians shouldn’t be charged some of the highest user fees in the world for a sub-standard service.
Latest posts by Unconventional Economist (see all)
- Sydney schools run out of play space - November 22, 2019
- There aren’t enough jobs for oldies to work longer - November 22, 2019
- Melbourne turns never-ending construction site - November 22, 2019