Selling the NBN dream

Selling the NBN dream

Summary: A little over a week ago Fairfax and News Ltd each ran a story about a collection of prominent Australians who would sell the benefits of the National Broadband Network to the Australian population.

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TOPICS: Broadband, Telcos, NBN
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A little over a week ago Fairfax and News Ltd each ran a story about a collection of prominent Australians who would sell the benefits of the National Broadband Network to the Australian population.

It seems the story was a little premature. The list included retired High Court Judge Michael Kirkby, conservationist Tim Flannery and CSIRO development head James Bradfield Moody. Most said they hadn't been approached by the government and none wanted to come on Twisted Wire to talk up benefits that the NBN would provide.

So if the government's supposed NBN champions aren't prepared to talk, who can sell the dream? I went to a couple of advertising creatives to see what approach they would take to try and promote the NBN. First I went to Jane Caro, freelance writer and panellist on the Gruen Transfer. She loves the idea of the broadband network, but believes it's a tough sell given our cynicism towards politicians. Bruce Potter, creative director at Streetwise Advertising, reckons it would be easier to find peace in the Middle East than convince everyone the NBN is a good idea.

For what it's worth, I reckon the government can unite most people — and possibly win the next election over it — but they need to listen to the detractors and come up with a compromise approach that will keep everyone satisfied.

Running time: 27 minutes 34 seconds

Topics: Broadband, Telcos, NBN

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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108 comments
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  • The NBN was a dream. Nothing more, nothing less, made up on a back of a place card on a trip with Rudd and Conroy on a plane.

    An idea that would hopefully woe the voters that labor had a plan. Did it work? Well it helped Labor to an extend get the vote of the independents to get power, but is it realistic? No.

    The economics are a shambles (no private telco would do this with the exception of Telstra on its terms of conditions - 14% return with holiday period and regulation to protect its investment), with Australians being in forever debt.

    Would it ever be successful? I doubt it, not by the government (real costing is $80-$100 billion, these numbers have been done properly by the incumbent - hence no fudge work). But the sounds of it does tickle the fancy of the 'dreamers', 'techno heads' and 'believers' who think they'll be getting free fast broadband everywhere.

    But the reality of it, like the old saying, 'if it looks like it, smells like it and tastes like it, then it probable is #$%^", and that's the fact. Not belief.
    Theguy-bbb4a
    • The dream may turn out to be a nightmare. The Budget deficit is reported to be $51 billion, that does not include the NBN CapEx of $50 billion.
      Vasso Massonic
      • Understand your accounting before shooting off about $50 billion capex. It IS NOT $50 billion capex. It is $36 billion in capex and the remaining $9 billion payment to Telstra for leasing their pits (operating expense, not capital expense) is to be paid out of NBN revenue. In any event neither numbers come out of the "FEDERAL BUDGET". The $36 billion will be borrowed by NBN Co and repaid by NBN Co out of NBN revenue, just the same as any other business does when it borrows money to start up.
        mstatz
        • @mstatz

          What NBN revenue?
          advocate-d95d7
        • Accounting is my profession.

          Fallacy 1 - "The $36 billion will be borrowed by NBN Co and repaid by NBN Co out of NBN revenue"

          Do you realise how long it would take to repay $36 billion from net profits over a decade whilst borrowings are accruing at a compounding rate of at least 6% pa.

          Fallacy 2 - "just the same as any other business does when it borrows money to start up."

          Name just one sane universal business who stated up with 100% borrowing of $50 billion.

          In the normal course of events, shareholders invest their money and borrowings are a rarity.
          Vasso Massonic
          • 1. Well almost every business borrows money to cover initial capital expenditure and they pay it back. $36 billion is just a number, you have to remember that NBN Co is national and is getting almost all of the revenue pie. Would you be making the same argument if the govt had divided australia up into 6 regions and each only had to pay back 6 billion? Does the smaller number make it more digestable even though it's exactly the same situation?

            Furthermore the 36 billion isn't being paid back from net profits, the 6% profit would be calculated after loan repayments had been factored in. NBN Co will be raking in billions in revenue and I can't imagine operational expenditure is going to put that huge a dent in it. The bigger chunk will be going to servicing the loans.

            2. My understanding is that the govt (taxpayer) provided the initial start up seed money of .. I want to say 4.7 billion but i could be wrong .. from the Building Australia Fund.

            By the way please explain to me why in "In the normal course of events, shareholders invest their money and borrowings are a rarity" a lender can't be considered eqivalent a single shareholder? They "invest" in a business by lending them money and they get a "shareholder return" via loan interest.
            redrover-fac06
          • In fallacy 1, repayment is said to be from revenue, meaning that expenses must be first deducted leaving net profit as the only money available to repay debt.

            - 'The $36 billion will be borrowed by NBN Co and repaid by NBN Co out of NBN revenue"

            Shareholders invest their money to buy the business, receive dividends and in the event the business fails, creditors are paid out or acquire the assets and shareholders are left with the debris.

            The NBN financial structure is a different kettle of fish. The $36 billion will be raised by the NBN Co by means of bonds Guaranteed by the Federal Government and in the event the project is abandoned creditors will continue to receive the interest until such time the Federal government is able to cash the principal bonds. Bond holders do not invest in NBN Co.
            Vasso Massonic
          • "In fallacy 1, repayment is said to be from revenue, meaning that expenses must be first deducted leaving net profit as the only money available to repay debt"
            ---- Since when is debt servicing not an expense? I will eat my shoes if the NBN Co budget doesn't spell out a timetable for repaying their debt over a fixed number of years and doesn't factor in the amount it will need to repay each year to do so (with a margin of error due to unknowns). Profit will be calculated after this expense. has been deducted.

            "Shareholders invest their money to buy the business, receive dividends and in the event the business fails, creditors are paid out or acquire the assets and shareholders are left with the debris."
            --- I don't get your point. Shareholders invest directly in a business and get direct returns. People who invest in lender institutions or hedge funds etc indirectly invest in businesses and indirectly get returns.
            redrover-fac06
          • See my response to Kevin below and make your own mind up.

            The proof of this pudding is in its successful completion and the trauma along the way.
            Vasso Massonic
          • Vasso... an Accountant?

            Yet I had to explain to you how the ex-dividend date worked on your precious TLS shares, over at NWAT, many moons ago…?

            I’ll stick with an accountant who knows what an ex-div is and who DIDN’T buy TLS at over inflated prices.
            Rizz-cd230
          • You wouldn't recognise an exdiv. date if you tripped over one.

            But I am still hopeful.........

            "Lol..no actually!

            Rizz was simply the closest thing to RS I could find, after trying a number of different things, when my login was lost in cyberspace...!

            Rizz
            21 minutes ago "

            Here's hoping that cyberspace will strike again or clean up your insulting posts.

            Vasso Massonic
            9 minutes ago
            Vasso Massonic
          • How quickly you forget or hide the truth... about ex-div... sigh!

            Insults work both ways and I have no intention of backing off while ever you tell porkies (as you did AGAIN with ex-div just a few hours ago)...

            Unbelievable...!
            Rizz-cd230
          • Who is this Rizz? I have not seen previous posts from this person.
            Knowledge Expert
          • There only some insulting one under this label, previously under RS now lost in space.
            Vasso Massonic
          • Vasso I am an accountant and you repeated again that the borrowings are $50 billion. They are not $50 billion. The $37billion is a loan/equity which is to be repaid. Loans are repaid out of profits. The $9billion is a lease payment, not payable in ONE year but spread out of several. Again this is paid out of revenue. Not where you studied but I think you may have missed some concepts along the way. BTW Revenue is that thing that the telco's will be paying NBN for use of the NBN, simple stuff really.
            mstatz
          • What revenue?
            advocate-d95d7
          • See my response to Kevin below and make your own mind up.

            The proof of this pudding is in its successful completion and the trauma along the way.
            Vasso Massonic
          • Mr Accountant again plucking $50B out of thin air...!

            Now are you ready to confess your sins of mistruth re: ex-div...
            Rizz-cd230
  • It was a dream and let us hope there is a possibility that it becomes a reality. Otherwise it will be a nightmare.
    sydneyla
  • Wow what nonsense did Bruce Potter go on with. Nothing constructive just expressed his right wing political views.

    Jane was great she had lots of great honest, balanced advise.

    Unfortunately the opposition have become such experts at creating fear, uncertainty and doubt in everything the government does, no matter what they do.

    Everyone wanted the NBN right up until Abbott assigned Malcom to tell everyone they didn't want it. The opposition are politically outclassing the government with their negative campaign.
    Steve123-b6932