The real cost of FttN for a Coalition Government.

The Coalition have consistently called the National Broadband Network far to expensive and a white elephant while their plan still has no price tag. The biggest problem with the Coalitions plan is that while construction costs may be 1/4 this does not include the cost of the copper last mile Telstra have stated that the cost of buying this will be in the range of $20 Billion [1]. So even at 1/4 the cost of construction we end up with close to $27 Billion for a network that will last less than an equivilant FttH network.

This is not the only economically poor move with FttN the other big problem is that while FttH is the pinnacle of speed for fixed line internet FttN is not. This leaves a government owned FttN network in a tight place you can’t stop people from buying FttH if it is available and if you give your biggest potential competitor $20 Billion what do you think will they do. Well here is an idea they will spend it on FttH in your most profitable areas and overbuild your network. Telstra have done this in the past [2] when HFC was being rolled out Telstra overbuilt Optus simply because they could this caused inflated prices on cable networks due to reduced economies of scale.

Now you may think that this is not a problem but the problem lies in the $27 billion that the Coalition will have to borrow to build their FttN dream. While the current NBN is FttH borrows $37 Billion $10 Billion more the ability to recoup these cost will be greatly hindered in a FttN world. This hindrance could be so large as to derail FttN profits and force the Coalitions NBN on budget causing a massive blowout of the budget deficit.

In my opinion this is not the act of a economically responsible opposition forcing billions of dollars on budget will significantly hinder their ability to provide the surplus that they want to deliver. They will also provide a significantly inferior broadband network at an increased or similar cost to the fibre NBN.

– AJ

[1] $20b feud with Telstra drove NBN’s birth

[2] Telstra’s Overbuild of the Optus HFC Network

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