Home Telecoms & NBN S&P report says 'damaging' write-down of NBN inevitable
S&P report says 'damaging' write-down of NBN inevitable Featured

Australia's national broadband network, the NBN, will not return a profit on the billions invested in the project, a new report from credit ratings agency Standard & Poor's says.

The Australian reported that S&P predicted a write-down of the NBN, which would be politically damaging to the Coalition Government.

The ratings agency claimed that the NBN Co's business model had led to Australian telecommunications companies investing heavily in mobile services in order to avoid paying the NBN Co's prices.

This, in turn, had led to a situation which affected NBN Co financially.

NBN Co has said on many occasions that it needs to reach average revenue per user of $52 in order to break even. The last figure it achieved was $44.

Back in February this year, Dr Mark Gregory, associate professor in network engineering at RMIT, commented that the half-yearly results, which had just been released at that time, were a "train wreck", adding that nothing could be done to get the company back on the rails.

Gregory added for good measure that, increasingly, statements that were made by NBN Co "about performance and progress are little more than fodder for the joke of the day".

The S&P report said: “NBN Co’s forecast take-up (of between 73% and 75%) will be hard to achieve without a step-change to its wholesale pricing model.

“We believe NBN Co’s high access charge has already led to lower speeds (both headline and actual), as well as lower adoption rates.”

As iTWire  reported last Thursday, Australia has an average mobile download speed of 50.53Mbps which places it eighth out of 124 countries, while fixed broadband download speeds are only 30.82Mbps, placing the country 54th out of 133 listed.

Commenting on the report, Labor Shadow Communications Minister Michelle Rowland said: “(Prime Minister Malcolm) Turnbull’s multi-technology mix is $20 billion over budget, costs more to maintain, generates less revenue and is more exposed to wireless competition.

“On every measure the long-term economics of the NBN have been compromised, with no benefit to the Australian consumer or taxpayer.

“Turnbull fleeced the nation under the false pretence (that) copper and HFC would be faster and cheaper – it wasn’t. It has been slower and more expensive."

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the sitecame into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

 

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