NBN Co’s founding CEO, Mike Quigley, claims the national broadbank network’s (NBN) viability has become diminished as a result of the changes implemented by the Coalition when it came to power in 2013. Quigley, who left NBN Co not long after the Coalition was elected, contends it has a fundamental problem in that it is using the wrong technology. With NBN Co to release an updated corporate plan in the week ending 30 August, Quigley believes it should remain publicly owned, and should not be sold to Telstra. From The AFR:
Mr Quigley warned that the technology choices made in deploying the NBN meant longer term revenue and particularly maintenance and upgrade costs were major unanswered questions for NBN, after the end of the rollout in 2020… “there is no doubt that the changes made by the Coalition in 2013 has made the viability of the NBN much more marginal”…
It is a big piece of infrastructure with a fundamental problem that it has used the wrong technology … anybody who analysed it will see that…
Mr Quigley said limitations in the infrastructure mean it will not be able to offer higher speed packages in future to drive up ARPU, and will have to spend huge amounts to maintain and upgrade the ageing technology.
“They’ve now got a network with much higher operating costs and much lower ability to generate revenue than FTTP,” Mr Quigley said…
Mr Quigley said he believed the NBN should remain in public ownership for the long haul, and definitely shouldn’t be sold to Telstra.
He said that, while no monopoly was ideal, he thought a publicly held one would at least be more likely be driven by the need to maximise public good rather than profits.
The problems with the NBN have been a long time in the making.
First, the Howard Government’s privatisation of Telstra gave it control of the fixed line telephone network, which competitors were forced to rent for access. The NBN was designed, in part, to fix this structural mess, and this came at great taxpayer expense. In 2011, the Government agreed to pay $9 billion in instalments for Telstra’s fixed line customers to migrate across to the NBN.
Second, former Communications Minister, Malcolm Turnbull, abandoned plans to build a fibre to the premise (FTTP) network across the majority of the country, instead replacing it with a multi-technology mix that included previously retired copper cabling. This change was marketed as a cost-saving move. However, the huge amount of rectification works required quickly saw the price tag for the NBN surge from an expected $30 billion to around $50 billion.
The upshot is that taxpayers have been left with a $50 billion dud network that costs customers more than the old ADSL service it replaced, and is generally no faster.
The NBN has become a cautionary example of infrastructure done badly. Accordingly, policy makers should take pause before answering the calls for government to quickly ramp up infrastructure projects to boost the economy.
