Questions raised over viability and timing of broadband plan

While information technology industry leaders have praised the Government’s plans for the national broadband network, experts have raised questions about the economic viability of the network and whether the ambitious eight-year timeline can actually be met. 

The Coalition has also flagged its opposition to the NBN plans, with Communications spokesman Senator Nick Minchin saying the plan is too expensive and branding it “a Rolls Royce service”.

“The question is whether it’s affordable, feasible, whether there is the requisite demand for such for a Rolls Royce service at prices that people can afford.”

Internode managing director Simon Hackett has said that while the decision was “remarkable” he has warned that “the devil is in the detail”.

“The Government appears to have listened to the industry. It avoids all of the pitfalls that the industry has said will happen with fibre-to-the-node, which is why fibre-to-the-home is such a good idea,” he says.

“But we’re going to need to see a lot of detail, how the physical order of the network gets built, the price of access – there’s lots of details that need to be worked out.”

Ovum research director David Kennedy has also said that the network in theory would be a massive benefit to the country, but that “…this is just the end of the beginning”.

“There’s a lot of work that needs to be done to establish whether fibre-to-the-home is actually viable, and what sort of time frame it would take. There is an initial cost of $43 billion, and an eight-year timeline, but I don’t take those sorts of numbers very seriously.

“The issue will be how much will people have to pay for access to the network? If it’s too high, no one’s going to use it and there’ll be no use for it. If it’s too low, you can’t recover the billions that are put into it.

“So is there a point that can satisfy those requirements?”

Opposition Leader Malcolm Turnbull has questioned whether the venture will deliver a return on investment.

“If, as the industry analysts say, this would require households who are currently paying say between $40 and $50 a month for broadband, to pay $150 a month for broadband, where is the evidence households will do that?”   

Kennedy has also questioned the Government’s timeline of eight years to construct the NBN. He expects a realistic roll-out of a fibre-to-the-home network to take up to 20 years.

“What doesn’t make sense is to press ahead with a Government investment that doesn’t get return on investment, or to try to do that too early. We need to be realistic about what’s achievable, and what that means is that we have to accept that it won’t be everywhere for quite a while, and the timeline is in the order of 15 to 20 years.”

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