NBN says some Aussies paying $9000 for a fibre connection, despite neighbours getting it for free

The government-owned telco has defended its fibre upgrade program and beleaguered satellite business, despite conceding some Aussies will have to significantly stump up for service.

NBN Co has admitted residents living in the same street may have to pay almost $10,000 to be connected to its fibre network, while neighbours will be able to access the high speed broadband for free.

The government-owned telco also defended, before a Senate committee on Tuesday, its Sky Muster satellite service after it attracted criticism from the Opposition stating its sales are “falling through the floor” as it loses ground to competitors such as Elon Musk’s Starlink.

Liberal Senator Dave Sharma grilled NBN’s interim chief executive Philip Knox over the telco’s finances, asking why it didn’t make any statements regarding cash flow in its latest accounts in the six months to December 31.

Mr Knox — who was NBN’s chief financial officer before former CEO Stephen Rue left the telco for Optus — told the committee at a budget estimates hearing he didn’t have those figures “handy”.

“I have to take that on notice Senator,” Mr Knox replied, before saying NBN’s acting chief financial officer Richard Cairns hadn’t accompanied him to the hearing.

Senator Sharma replied: “I’m just asking for some simple financial metrics which are in your published documents. You don’t have them available?”

Mr Knox repeated he did not have the figures at hand, despite saying he was the telco’s chief financial officer during the period, prompting further criticism from Senator Sharma.

He later was able to find the figures, saying during the half-year to December 31, it was “about $1.06bn negative free cash flow”. Senator Sharma said this reflected a “deterioration” of about $400m — or 70 per cent — in a year.

“Well, deterioration depends on how you look at it,” Mr Knox said. “If the main reason for the change was the significant investments we continue to make, and these are largely investments that provide us with a return.

“We don’t provide forward guidance on our financials, mainly because we now have a considerable amount of commercial debt, and we need to be very careful about crossing boundaries in terms of making forecasts into those markets.”

Elon Musk’s Starlink has been poaching fed-up NBN Sky Muster customers.

Asked if NBN Co’s cash flow was going to continue to “deteriorate” at a rate of 70 per cent a year, Mr Knox said it was the “nature of these infrastructure builds”.

“The heavy investment is in the early days, and then once that investment is complete is when the cash flows turn positive.

“It’s a question of, when do we stop the investments? And at the moment, the investments are all about lifting that digital capability for Australia. So these investments in fibre, which provides us with savings further down the track because of the cost of servicing legacy technologies.”

Dave Sharma says he has received complaints from constituents who have had to pay about $9000 to be connected while others have enjoyed access free-of-charge. Picture: Jonathan Ng

These investments include NBN’s fibre upgrade program, which will connect about 3.5 million premises across Australia by December next year.

While chief network officer Dion Ljubanovic said for households “within that footprint” it will be a free upgrade, he conceded there will be some who will have to pay thousands of dollars if they want to be connected.

Senator Sharma said in Western Sydney he had received complaints from constituents who have had to pay about $9000 to be connected while others have enjoyed access free-of-charge.

“We have around 600,000 premises that aren’t in that program, and depending on that address, Senator, there is a technology choice option for customers to pay for those upgrades where it’s uneconomical for NBN to provide,” Mr Ljubanovic said.

Senator Sharma asked if it meant residents living in the same street would have to pay almost $10,000 to be connected, despite their neighbours receiving no bill.

“There are there are areas within the footprint that are highly uneconomical for us, and that’s determined based on pit and pipe infrastructure that’s available in certain parts of suburbs and areas that may not be,” Mr Ljubanovic said.

“So there are areas where potentially some parts of streets and communities won’t be able to get or be part of the 3.5 million upgrade program at this point in time because of the nature and the costs associated to get fibre deeper into those areas. So there may be that situation where customers are on the edge of our upgraded program.”

Some Australians will pay thousands of dollars for a fibre upgrade, while others will get access for free.

The Opposition has also been critical of NBN’s Sky Muster satellite business, after its number connections dived by 21,000 or almost 20 per cent in the first quarter of 2024.

Liberal Senator Sarah Henderson said customers in regional areas were “pulling their hair out” over slow broadband speeds, which was damaging small businesses, and prompting them to sign up with competitors, including Mr Musk’s Starlink.

“They’re moving across because they can’t run their businesses based on some of the terrible experiences they’ve had on Sky Muster. So my question is, what is NBN doing about this?” Senator Henderson said.

NBN chief development officer for regional and remote areas Gavin Williams said: “as the marketing adage goes, if there is a new hippopotamus in the zoo, customers will go and take a look”.

NBN’s Gavin Williams says customers experiencing poor satellite connectivity should contact their NBN retailer.

“It’s realistic to expect, when there are significant market shifts and new entrants that market shares will move around.

“For our part, the important thing is to ensure we do everything we can to make sure our services are match fit, and to that end, for our fixed wireless service, we’re upgrading that significantly as part of a Commonwealth co-investment, $480, to lift its average capability, to lift the highest speeds available on that network, so the customers in regional Australia can really take advantage of the sort of economic benefits.”

Senator Henderson criticised the government’s lack of action to ensure NBN could respond to competitive threats from the likes of Starlink.

“My concern is why the government’s response to what is a massive, massive issue for NBN was simply to establish a low orbit satellite committee back in October 2022, but there doesn’t seem to have been any subsequent action, including from the NBN on this significant competitive threat, and as a result, your satellite business is diving.”

Mr Williams said if people were having connectivity issues, they should contact their NBN retailer to ensure it’s fixed.

“What I’d say to customers who are not enjoying a Sky Muster service that they feel they’ve bought is to contact the retailer because professional assurance, wherever it is, across our footprint, is one of the things that we do if we determine that it’s an NBN (service).”