By David Crowe
Labor is vowing to back the national broadband network in a face-off with tech titan Elon Musk after pledging $3.8 billion on faster speeds to prevent his Starlink satellite company from poaching customers and eroding the network’s revenue.
Communications Minister Michelle Rowland said there was “no way” the Musk venture could match the NBN fibre network as she set out plans to improve speeds rather than chasing profits.
The competition from Elon Musk’s Starlink has the potential to undermine NBN Co’s financial performance. Credit: Aresna Villenueva
The plans clear the way for a growing political dispute over the future of the network when the Coalition is warning about NBN price hikes and the risk of losing customers to rivals such as Starlink.
“There is no way that Starlink would be able to deliver the speeds, capability and low latency that is delivered by fibre,” Rowland said in an interview.
Rowland acknowledged, however, that Musk’s company was gaining NBN customers who could not connect to the full fibre network and were restricted to slower speeds on copper, presenting a financial challenge.
NBN retailers charge $105 a month for packages using fibre to deliver download speeds of about 50 megabits per second in peak times, while Starlink costs about $139 a month for download speeds from 20 to 100 megabits per second over satellite. Starlink customers also have to pay $599 for hardware.
Michelle Rowland rejects the assertion that Elon Musk’s Starlink technology has made the NBN redundant.Credit: Alex Ellinghausen
The competition from Starlink has the potential to undermine NBN Co’s financial performance when it is losing money and requires support from taxpayers. The company increased its customer base by just 0.58 per cent last year to 8.61 million homes and businesses.
Rowland said Starlink could gain customers in areas that were poorly served by slower copper lines, but the satellite company could not match the “equity” of the NBN.
“It’s not an equity product. It has a higher set-up cost. It does have higher ongoing costs, which some people are willing to pay for,” she said.
“But that does not align with the mission of the NBN, which has always been about providing equality of opportunity between metro and regional areas.”
Rowland also said Starlink had to turn away customers in some areas that were already heavily served by the low-Earth-orbiting satellites because they had reached capacity.
“There’s only so many birds in that constellation that can be above a particular place in the sky at any given time,” she said.
“So while it does fulfil the needs of some customers, it’s not suitable to all.”
Industry consultant Paul Budde said Starlink had already attracted many Australian customers, and he expected this to continue.
“My guess is that NBN will do a deal with Starlink if geopolicy allows. In that way they could potentially get some customers back – if their pricing is competitive,” he said.
NBN Co, which owns and operates the network, has accumulated losses of $35 billion from the construction of the project. Prime Minister Anthony Albanese and Rowland announced a $2.4 billion investment in the company in October 2022 and another $3 billion this month. In addition, NBN Co said this month it would invest $800 million into the network.
While the federal investments add to commonwealth debt, they are treated as assets rather than recurrent spending in the budget.
The Coalition said it “would not stand in the way” of this month’s $3.8 billion plan but its new communications spokesman, Melissa McIntosh, criticised the government for allowing broadband prices to rise.
“There are price increases which have impacted Australian families during this cost-of-living crisis,” McIntosh said.
The Coalition voted against a government bill introduced last year to keep the NBN in public hands; the bill is yet to be decided in the Senate.
NBN Co provides a wholesale service and relies on resellers such as Telstra and Optus to set retail prices. The wholesale price of its home standard package – 50 megabits per second download speed and 20 megabits per second upload speed – is due to rise 5 per cent to $50.52 this year.
Rowland blamed the Coalition’s management of the NBN over nine years to 2022 for the rise in costs and the network’s continued losses but said service would be more important than profit.
“This isn’t owned by the private sector – there are other competing factors to making a profit,” she said.
“They include the benefits that accrue to citizens and business, the way in which it adds to GDP and quality of life. That’s how we measure it.”
NBN Co increased revenue by 4.4 per cent to $5.5 billion last year but is weighed down by debt. It posted a $1.4 billion total comprehensive loss in the year to June 2024, deeper than the $1.1 billion loss the previous year.
In a sign those losses will continue, the company spent $891 million last year on the interest bill for its debt, a cost that has been increasing each year. It has $42.5 billion in total liabilities, compared to $38.8 billion in assets.
Budde said it would take beyond 2030 for NBN to turn a profit, once the rollout was complete and the company only had to cover maintenance costs.
Starlink is a private company owned by SpaceX, in which Musk has a 42 per cent stake and is CEO, and does not release Australian customer numbers.
The plan to invest $3.8 billion in the NBN is forecast to connect another 622,000 homes to the fibre-to-the-premises network, offering faster speeds than fibre-to-the-node connections that use copper lines some of the way.
Rowland said there would be no political influence on the NBN over where the homes would be connected but she would announce some of the locations in the lead-up to the election.
“They’re engineering decisions that are made by NBN, and they exist as a function of where the copper is located,” she said.
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