National Broadband Network gets crushing blow in new S&P report

IT’S all going from bad to worse for the NBN, with a new report suggesting the internet provider could be in serious trouble.

IT’S all going from bad to worse for the National Broadband Network.

Ratings agency Standard & Poor’s has released a new report deeming the network unviable, saying it’s unlikely to deliver a return on the $50 billion invested in the project.

The rise of 5G mobile services poses a risk to the network, with the agency warning these could enable people to abandon fixed-line internet connections altogether at home.

“We believe it is getting harder for the Government to stand behind the presupposition that NBN Co. will generate a commercial return on investment,” the report said.

“Any shortfall in NBN Co’s revenue target raises the prospect of a writedown and additional government funding to support the company, potentially in the form of debt relief or direct subsidies.”

It noted the network’s “unusually complex pricing model” is part of the problem.

The network’s controversial wholesale pricing model has forced Australian telcos to invest heavily in mobile networks.

“NBN Co’s forecast take-up (of between 73 per cent and 75 per cent) will be hard to achieve without a step-change to its wholesale pricing model,” the report said.

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

The analysis warned that, while the NBN would achieve its aims of closing the gap between metropolitan and regional areas, and engineering the structural separation of Telstra, this would come at a huge cost to taxpayers, subscribers and telcos.

A new report suggests the NBN could be in serious trouble.

While the rise of 5G services was deemed a key player, it was not the only one.

“NBN Co has to contend with the global phenomenon of rapidly advancing mobile technologies.

“However, many of its problems are uniquely Australian: a retrograde technology mix, political involvement, rollout miscalculations, cross-subsidisation of unprofitable regions, as well as a convoluted pricing structure that puts the onus on RSPs (Retail Service Providers) to adequately provision bandwidth.

“In our opinion, regulatory distortions will exacerbate the nascent trend toward mobile substitution. NBN Co’s average access charge of $44 per premises per month simply leaves too much money on the table.

“This has spawned an infrastructure arms race among mobile network operators (MNOs) as they seek to bypass the NBN with their own ‘wireless fibre’ networks. The corollary, in our view, is that Australia will likely be a global leader in mobile broadband adoption.”

A June survey revealed more than one-third of NBN users wish they could ditch the network altogether.

A survey of 958 NBN users by comparison website finder.com.au revealed 34 per cent would switch back to their pre-NBN service in a flash — no doubt faster than the internet speeds they are now getting — if they had the option.

Of those, 22 per cent said their old connection was faster, more reliable and dropped out less.

Another 11 per cent said their old service was cheaper, or better value overall.