5G to force bigger NBN write down

The notion that lightening fast 5G mobile will make the national broadband network (NBN) obsolete is about to be tested with Telstra and Optus offering cheaper, faster 5G alternatives to compete directly with the NBN:

Far from being a pipe dream, the likes of Telstra, TPG and Optus are confident they can use 5G technology to lure a significant chunk of homes away from the NBN…

Telstra this week delivered peak download speeds of 4.2 gigabits per second (Gbps), four times faster than the fastest NBN plan available to homes, using 5G technology.

Meanwhile, Optus is gearing up to launch two 5G wireless services priced at $75 a month and $90 a month respectively that on paper can easily go toe-to-toe against fixed-line NBN plans in the market.

The $75 a month plan promises maximum download speeds of 100 megabits per second (Mbps) and an average download speed of 85Mbps between the busy 7pm-11pm time slot. The $90 a month plan, according to Optus, “currently delivers an average download speed of 214Mbps (between 7pm-11pm)”…

Telecommunications analyst Ian Martin says the percentage of homes that will choose to bypass the NBN will likely continue to rise. “We are at a 20 per cent bypass at the moment and that could go to 30 per cent over three years…

“You will see a big increase in contestability in the market over three years, where we are at the moment they can contest 20 to 30 per cent of the broadband market but with mmWave and related developments in three years time they may be able to contest up to 40 per cent.”

More competing services are certain to emerge to capitalise on the need for genuinely fast broadband.

In March, the Parliamentary Budget Office reported that the “fair value” (or saleable value) of the NBN was just $8.7 billion – less than one-third the federal government’s equity investment. Thus, the NBN required a $21 billion writedown.

With every competing service, the likelihood of NBN Co ever making a profit recedes. And with it, the PBO’s “fair value” estimate becomes increasingly fragile meaning the federal government faces an even bigger writedown.

Unconventional Economist
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Comments

  1. 5G to force bigger NBN write down

    “NBN to force a 5G tax” is a more likely headline.

    From 1 Jan 2021 there will be a tax on non-NBN broadband of $7.90 a month. Expect this to be extended to 5G plans.

    • Parliament introduced a tax on non-NBN fixed lines, to make NBN appear more competitive. There is a high likelihood they will repeat their actions on 5G as well, for the same Reason. We really need Politicians to keep out of making engineering decisions because they aren’t really bright people. Well except for Malcolm Turnbull, he invented the Internet in Australia 🙂

  2. Until they roll out the higher bandwidth version of 5G across enough of the country this 5G competition is only possible due to the poor quality of the rollout of NBN Lite… as the LNP has decided the NBN will get upgraded to something like what the ALP was trying to do I cant see 5G being a longer term competitor for anything more than mobile applications….

  3. “The notion that lightening fast 5G mobile will make the national broadband network (NBN) obsolete”

    Only if NBN follows the Foxtel’s and Nokia lazy approach.
    It is simple enough to upgrade fibre to the modem (like in the third world countries) and 5G suddenly becomes a model T.
    So no, 5G will only be good for some application, e.g. mobile and remote area coverage – but not in the urbanised areas.

  4. Vodafone 4G is plenty good enough to lure this house-hold from going near a NBN contract… 5G will decimate the viability of the NBN at its current retail prices… hence you are bang-on, price correction and write-downs for days!

  5. 5G is not a substitute for fibre. It is not competition, it is not a replacement.

    This narrative is a dead-end.

  6. plebngineerMEMBER

    Meanwhile I can’t even make a phone call in my house due to shithouse reception. Good luck with getting 5G to work.