“The technology mix for the NBN has diversified, meaning different users will receive different types of connections. This change will deliver varied outcomes for users, and some may shoulder higher costs or receive lower-quality services,” the report said.
The government-owned NBN Co is required to achieve a 3.2 per cent return on investment to remain an off-budget asset rather than a liability, leading to “an inherent tension between the NBN’s strategic goals,” the infrastructure advisory body warned, saying it would potentially have to trade-off user outcomes to deliver the return.
“If all goals cannot be achieved, the ability for Australians to access affordable and high quality NBN services may be negatively affected.”
The report said the target rate of return was based on assumptions about increased average revenue per user, the attractiveness of top tier broadband packages and the NBN’s resilience against competing services.
“However, there are concerns around the realisation of these assumptions given users’ apparent unwillingness to pay more for additional services, challenges in achieving fast speeds across all technologies, and the imminent rollout of competing 5G fixed wireless and mobile networks,” it said.
The Infrastructure Australia report said retail price cuts for NBN packages should increase take-up of superior connections while higher prices would suppress that demand and “subdue the economic benefits” of the network.
A spokesman for NBN Co said the network was being built to meet the country’s needs, which comes at a “significant cost” in the initial rollout, ongoing maintenance and future upgrades.
“We consult regularly with industry on our wholesale pricing structures, keeping in mind the economics of retail providers and NBN Co’s need to reinvest in the network. These have led to significant price reductions in recent years, while also boosting customer take-up of higher speed plans,” the spokesman said.
He said fixed broadband networks, rather than mobile networks, “do the heavy lifting” in Australia as in other countries.
Labor communications spokeswoman Michelle Rowland said the Coalition had promised a faster and cheaper NBN rollout but had delivered a “business model that needs more cash flows — but has less ability to generate it because of inferior technology and higher costs”.
A spokesman for Communication Minister Paul Fletcher said the Coalition’s rollout had dramatically accelerated the number of Australians connecting to the NBN and saved taxpayers almost $30 billion.
“When the NBN rollout is completed, Australia will be the first country of its size and population density to guarantee universal, affordable fast broadband services to all homes and businesses,” the spokesman said.
He said retail broadband prices had fallen since the NBN was introduced and NBN Co’s financial objectives protected the interests of taxpayers. He said delivering the project required significant capital expenditure.
“NBN Co is a commercial business that needs to generate sustainable cashflows in order to support its operations and its capital expenditure, future network upgrades, improve customer experience and service and repay debt,” he said.
10 million homes and businesses are now able to connect to the NBN and more than 5.7 million premises have activated their connections, with increased appetite for the higher speed tiers of the network as 56 per cent of premises opt for plans of 50 Mbps or higher.
The company divulged that 183,000 active fibre-to-the-node connections of the total 2.4 million are not achieving required speeds of more than 25 Mbps.
Fergus Hunter is an education and communications reporter for The Sydney Morning Herald and The Age.