NBN access less affordable as network cost hits $57 billion

The cost of the NBN has climbed again for a network that is becoming less affordable for people to access.

It will be up to retailers to determine whether discounts to NBN services – which cost the poorest Australians a sizeable chunk of their income – are passed on to consumers as the federal Opposition hits out at the increasing cost of the Coalition’s “inferior” NBN.

“In 2013, the Liberals promised their inferior multi-technology mix would cost $29.5 billion. That increased to $41 billion in 2014, to $49 billion in 2016, to $51 billion in 2018,” shadow communications minister Michelle Rowland said in a statement on Wednesday.

NBN is still looking for more money after the “initial rollout” was completed.

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“According to NBN’s 2021 corporate plan, they’re stating that the cost for the NBN to have completed the volume build and deliver on their previous corporate plan was $51 billion,” Communications department assistant secretary Andrew Madsen said at the Senate Environment and Communications Legislation Committee on Wednesday.

“And there’s a forecast for peak funding to reach $57 billion as I understand it?” Queensland Labor Senator Nita Green asked.

“In the current corporate plan the company has outlined new investments they have made that will generate a positive return for the business and lift its rate of return from 3.2 per cent to 3.7 per cent, and those investments will require a capital outlay over the coming years out to 2023 and then have a positive rate of return for the business in the following period,” Mr Madsen responded.

“Sorry, I think you’re trying to be a little bit clever with that answer there, I’m actually just interested in what that rollout cost will be … I’m actually just asking about the funding itself, will that reach $57 billion?”

“In terms of investment decisions post initial rollout of the NBN, they’re a different consideration, and these investments are being funded from public debt markets,” department secretary Simon Atkinson responded.

“So if we add those two figures together, is it 57 billion?” Senator Green asked.

“Are you asking whether 49 plus 8 equals 57?” Mr Atkinson returned.

Simon Atkinson must have thought he was back in primary school maths while crunching the numbers on how much the NBN cost.

Queensland Labor Senator Nita Green thought department figures were being ‘a little bit clever’ with some of their answers.

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“Under questioning by Senator Green, officials did their best to avoid confirming the figure which (communications Minister Paul) Fletcher had tried to conceal from the corporate plan,” Ms Rowland added.

She said that Australians had been “saddled with an inferior NBN that costs more and does less than the original fibre plan”.

While the Opposition argues the NBN “costs more and does less”, NBN Co’s chief customer officer Brad Whitcomb told news.com.au the company wants to offer “a lot more for a little bit more” to “create that ladder for customers that would have a better experience on a higher speed to get up there”.

The NBN wants customers on higher speed plans but if you connect through one of these boxes the network struggles to deliver higher speeds.

That was part of the NBN’s new “Focus on Fast” campaign, which incentivises retailers to push you on to higher speed broadband plans (that the most common connection type can’t really support).

It’s doing this by bringing forward capacity boosts that will save the telcos having to purchase additional capacity for their networks.

The company earlier boosted capacity for free to help the country cope with COVID-19 restrictions and a sudden need for more people to work from home on their residential NBN plans, but with those boosts set to end in the coming months the company is trying to transition telcos off them.

NBN COSTS UP, AFFORDABILITY DOWN

While the cost of the NBN has increased significantly from forecasted figures over the years, it’s also become less affordable for users.

For the poorest Australians, internet services now eat up four per cent of their income, according to The Australian Digital Inclusion Index 2020 report released on Thursday morning.

Australian Communications Consumer Action Network (ACCAN) CEO Teresa Corbin told news.com.au it was important to provide relief to these customers.

“As the past few months of rolling lockdowns have demonstrated, a reliable home broadband connection is a vital utility. Being able to get online to access education, work, telehealth and government services has been instrumental for millions of Australians during the COVID-19 pandemic.”

NBN Co is lowering the cost of its entry-level bundle, but it will be up to telcos to actually pass the savings on.

NBN Co is trying to make access cheaper, with plans to gradually shave almost $5 a month off the wholesale price of the most basic NBN plan over the next several months.

The entry level bundle, which offers download speeds up to 12Mbps and upload speeds of 1Mbps, will drop from $27.40 in October to $22.50 by May. (Those prices are what your telco pays before it sells access to you at a price of its choosing.)

“We have been quite active in supporting both the appetite and the interest in higher speeds, also though you can see what we’re doing on the entry level bundle that’s a substantial reduction in the wholesale cost at the entry level,” Mr Whitcomb said.

Ms Corbin said ACCAN was “pleased” that the NBN had “recognised the importance of no Australian being left offline because of their inability to afford a connection”.

“We need to make sure that this basic modern utility is affordable for all,” Ms Corbin said.

“The discounted wholesale price means that consumers who only want the most basic connection should expect a lower monthly internet bill, provided that their telco passes on the discount.”

And that’s the $4.90 question.

“We do offer a number of plans back to our retailers but ultimately it’s up to the retailers to set the retail price depending on what customer segment they’re trying to serve,” Mr Whitcomb said.

“It’s entirely up to the telco how they play it; that’s a matter for retailers.”

Telco industry peak body Communications Alliance welcomed the announcement but a spokesperson had “nothing further to add” when asked if NBN customers could expect to see the savings passed on.