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It will take decades for NBN costs to be recouped

It will take decades for NBN costs to be recouped

Originally posted by Jennifer Duke @ www.smh.com.au

While NBN was forecasting a significant rise in consumer demand for higher speeds in coming years, “there appears to be limited evidence to support this assumption", Telstra said.

“Based on current projections, it will be many decades (if ever) before the full cost of investment is paid back, by which time Australian consumers would have paid tens of billions of dollars in ...  return on capital.”

It said the government should consider these issues “sooner than the medium term”.

New pricing arrangements announced by NBN in December, which aim to encourage take-up of faster speed bundles, could improve returns.

Optus also pushed for a “near-term” review of the draft’s recommendation for the government to consider whether NBN should be required to recover its full cost of investment through its prices.

It said the requirement to achieve a dedicated internal rate of return limited NBN’s ability to adopt pricing reforms to promote the long-term interests of users.

Its submission also said NBN’s “pricing policy appears to be dictated” by its average revenue per user growth requirements, which had “very real impacts on consumer pricing”.

TPG Telecom said the NBN should be allowed to finish its rollout as quickly as possible.

“Governments should accept whatever the financial outcome is for that, take the financial hit (as we expect will be necessary) and the NBN should compete with private capital so that the industry can return, as quickly as possible, to a more rational economic circumstance,” it said.

“We consider this will take quite a long time.”

The NBN Co submission said “these matters are policy matters which are appropriately considered and progressed by NBN with its shareholder's departments”.

It did not provide further comment.

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