NBN Co’s pricing proposal lodged with the Australian Competition and Consumer Commission (ACCC) claimed that “accelerating” competition from mobile broadband is threatening the market share and viability of the National Broadband Network (NBN).
It is easy to see why. A typical 50mbps download speed on the NBN costs consumers around $70 per month, while Optus and TPG are offering Fixed Wireless Access 5G broadband at the same speed but $10 to $15 cheaper.
Fixed Wireless Access 5G broadband has also stolen significant market share from New Zealand’s far superior NBN-equivalent infrastructure “Spark”.
The growing competition from 5G is making the NBN increasingly uneconomic.
NBN Co’s huge fixed costs (estimated to be $57 billion by 2024) requires the lion’s share of Australian households to be signed up in order to deliver a commercial return.
But with significant numbers of households abandoning the NBN for wireless alternatives, these fixed costs are being spread over a smaller user base – a situation that will only worsen if NBN continues to lose market share.
With this background in mind, it is easy to understand why NBN Co will cut 500 jobs (out of 4650) in order to lower its cost base and make it more competitive.
Chief executive Stephen Rue broke the news to employees at an all-staff meeting on Tuesday afternoon, stating the NBN’s “environment is changing”.
“The competition NBN faces to win and retain customers is intensifying”, Rue said via email. “Continuing to deliver on our purpose of lifting the digital capability of Australia means navigating these changes”.
Rue said the changes would “simplify” the company and cut duplication, making NBN “more commercially and operationally efficient”.
“They will make NBN leaner. Our employee base across the company will reduce by around 500 people, or about 10%”.
It is understood that the cuts will mostly impact managerial roles, with NBN Co “seeking to preserve and grow field-based roles associated with its national fibre upgrade program, and the ongoing upgrades to its fixed wireless and satellite network”.
However, they do not change the underlying poor economics of the NBN, which will become even more challenging as mobile technologies evolve and continue to steal market share.
