Tassie NBN unviable alone, pricing to rise

Tassie NBN unviable alone, pricing to rise

Summary: The Liberals' plan to axe the NBN and leave existing services in place would never work because Tasmania's NBN would be unviable without current high levels of cross-subsidisation, Senator Stephen Conroy argued in a far-reaching speech after which he also confirmed that Tasmanian NBN access prices are certain to rise in the near future.

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The Liberals' plan to axe the NBN and leave existing services in place would never work because Tasmania's NBN would be unviable without current high levels of cross-subsidisation, Senator Stephen Conroy argued in a far-reaching speech after which he also confirmed that Tasmanian NBN access prices are certain to rise in the near future.

Stephen Conroy

Stephen Conroy (Credit: David Braue/ZDNet Australia)

Warning that Tony Abbott "will wreak havoc" on the NBN if he's elected and that many Tasmanians are "absolutely frantic" about the prospect of the NBN being axed, Conroy poured cold water on the belief that the Tasmanian towns currently hooked up to the NBN would be able to retain their services even if a Liberal win saw the mainland NBN project discontinued.

"The momentum for the NBN in Tasmania is unstoppable, but the Tasmanian NBN is not financially viable in its own sense," Conroy explained, speaking to an audience of around 200 business and IT industry leaders at an Australian Information Industry Association (AIIA) lunch in Melbourne.

"It has to be part of a national network. The entire wholesale pricing model that will ultimately be in place is based on a cross subsidy between the more populous areas of Australia and the less populous areas of Australia. It is, unashamedly, a cross subsidy. So if you don't do the rest of the network, there's no one to cross-subsidise Tasmania."

Abbott has repeatedly said he will stop construction of the NBN if elected, but will honour existing contracts — which would imply a continuation of the Tasmanian NBN build. But Conroy's implication is that the Liberal Party's mooted changes would require significant ongoing funding to keep the Tasmanian leg of the NBN live, as well as any other mainland components that have been contracted out come election day.

Opposition communications spokesperson Tony Smith was contacted to clarify whether Liberal policy includes subsidies to preserve existing services, but had not responded by press time.

Even with cross-subsidies in place, however, Conroy confirmed that Tasmanians can expect the price of NBN internet access to rise when current honeymoon rates — offered by the likes of Primus, Internode and iiNet — run their course.

"I don't think these will be long-term prices," Conroy said. "When you see NBN Co set a wholesale price at a national level, you'll get a better indication of what the prices are."

Internet service provider (ISP) heads have previously flagged the potential for price changes, with Internode managing director Simon Hackett previously suggesting that current prices "may bear little resemblance to what emerges under the NBN proper".

Even with final pricing up in the air, Conroy was still happy to beat the drum of competition, arguing that providers' one-upmanship in Tasmania — ISPs fought a brief but heated price war as NBN carriage rates were announced in recent months — was reflective of the way competition would drive down prices across the entire NBN.

"We will have 100 per cent of all fixed-line customers using the NBN," Conroy said. "The price isn't an issue any more, because you will see price competition for the first time at a retail level... And you've got to remember: when you switch off the copper, you don't need to pay line rental any more [as with most ADSL2+ plans in the market]. By and large most Australians still pay the $30 a month, so these are serious savings, and serious competition coming into the marketplace."

Topics: NBN, Broadband, Government AU

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Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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28 comments
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  • Switching off the copper means no phone when the power goes out. Is that a wise choice for businesses, hospitals and other sectors which need to be able to communicate at all times?
    mitsuhashi
  • Fiber will take over the copper. Excellent choice. The time for IP Phones and Telepresence High Def video calling and Cheap international calling/video calling rates are on its way. Telepresence / Health Presence is an important addition to us all. With Fiber, we can have a high-def Health Presence session with the any doctor or specialist from any hospital or medical center around the globe 24hours 7 days a week! Better for education too!
    p@...
  • ...and I mean, a doctor diagnosing you from the comfort of your own home via your 52inch high def TV! wow!
    p@...
  • Yes - infrastructure that costs countless billions that will be made redundant by rapidly improving wireless technologies within 5-10 years is a great idea. And a filter that they have conveniently shelved for the election that will undermine our freedom and lead us down the path to a police state. Yes, it all sounds great Conroy - you are a top bloke.
    cinco-22aca
  • Wireless is the future. Fibre can be used to backhaul.The NBN plan is a disaster.
    There are many players in the Telco market currently,. It is demand that will build viable and competitive networks, not one big government owned dinosaur. I thought that was why Telstra was sold off? Spend the money on renewable power and lets lead the world in green technology.
    Bruiser0211
  • Wish the media would report what exactly the liberals intend to do instead of giving abbott a free ride.
    Hooble
  • You know Conroy is a fool when he refers to the Tasmanian NBN. How can you have a Tasmanian National Broadband Network?
    mwil19-a34f7
  • If Conroy's argument about cross-subsidisation is correct in such a small area, then the NBN Co is going to be saddled with a lot more marginal areas on mainland Australia. In reality, the Tasmanian fibre network could be turned over to Aurora, Optus or Telstra for management. Afterall it is 'sunk' expenditure now.
    FiberLover
  • I just can't comprehend spending 43 billion we haven't got on something that is not economically viable. If it was worth doing, private industry would be beating government to the punch.
    mwil19-a34f7
  • mwil19,

    You don't get government functions do you? One of the Governments functions is to provide SERVICES to where private sector CAN'T, or WON'T.

    The problems here in regards to the NBN, is the lack of understanding & Resistance from Politicians, Journalists, Media, and people like yourself. The problem for some people (and this is including the Media who side with Tony Abbott) is that you have to start small, Tasmania NBN in stages 1,2,3 etc is an example, it's not completed.

    What Conroy is saying is that ( and I'm no big fan of him btw) is that If Coalition Government is elected, expect price rises, because Abbott will discontinue the NBN. If you elect Tony Abbott as PM, your automatically guaranteeing the Death of the NBN in any shape or form, and will restart the process to a more cheap and EASY solution.
    Nitrofiet
  • Zero Nut,

    As someone who has worked in IT for 15 years and consults to government, I get that government's role is to provide services that the public sector won't. My issue isn't that it shouldn't be done, my issue is a purely economic one. We DO NOT HAVE 43 billon dollars to spend on this. All cost benefit analysis for this project (most of which is suppressed by the Conroy gang) shows that there is no real return on investment for this. That wouldn't be a huge problem if they were paying cash, but given the government will be building this with borrowed funds, you will either pay for this by the NBN jacking their prices or the government jacking up your taxes.
    mwil19-a34f7
  • With the various figures provided (as much as one can glean from the Spin & Hype) the cost per connection would be about $8/month per connection over the shortest projected life of a fibre network. That is seriously cheap and theoretically means lower cost connections.
    But more likely represents a sustainable profit stream for the varrious ISP's and content providers.

    It should stay in Public ownership. If cost-benefit was always done we wouldn't have the current copper network, so those arguments are superfluous.
    Finally, health and education are also important but no private companies go the whole hog to provide public service so why would they do this. In any case, if it was private only, it really would be unviable to only connect those that could afford the bigger costs from about 1/3 the possible connections.

    This is also why, after building the NBN it should remain in Government hands. If businesses can't stump up the $43B to build it, why should they get a complete, working network with paying customers for anything less than a package premium of around $70+B after it is all done and dusted? They won't want it for more than half it's real value. Tell them to go away! This is National Infrastructure. Hasn't anyone learnt from the disaster of privatising the various utilities and road networks?
    pilotyoda
  • Wireless cannot do the job of fibre. It struggles to cope now. Fibre is also impervious to most disasters and catastrophes. wireless is definitely not.
    Think of the issues where Phone towers have black spots everywhere, they overload at peak times, etc
    Finally, how much of the spectrum are you prepared to sacrifice to Wireless Broadband. Already many bands are being poached by the big spenders. You could say goodbye to FTA television, radio, wireless microphones (sorry - they have just lost their spectrum), wi-fi, bluetooth, etc. And still have poor connection speed when loads increase.
    pilotyoda
  • Why is it some Australians have been overcome by Solitis. An affliction which stemmed from the ill-fated and backward tenure at Telstra, of Sol Trujillo. An affliction where the "ROI/dollar is the only consideration".

    Last time I looked, Australia the nation was not listed on the ASX! Hmmm.

    As a taxpayer, I pay taxes for many reasons, including the government building infrastructure for the betterment of the nation/all of us. I do not expect roads to run at a profit, nor hospitals and if need be, neither the NBN. Do we close hospitals because they don't provide a ROI? Apparently this would be a definite consideration for those with Solitis.

    These are essential services that we as a nation require and yes, communications is one of them! The ROI or lack thereof shouldn't be the "determining factor", in an evolved society.

    But all those with Solitis, only consider the $'s! What a shame the all mighty dollar is taking precedence over the well being and progresion of our nation/us the people... Good thing our forefathers had better insight than we (well you) do.
    RS-ef540
  • Why is it some Australians have been overcome by Solitis. An affliction which stemmed from the ill-fated and backward tenure at Telstra, of Sol Trujillo. An affliction where the "ROI/dollar is the only consideration".

    Last time I looked, Australia the nation was not listed on the ASX! Hmmm.

    As a taxpayer, I pay taxes for many reasons, including the government building infrastructure for the betterment of the nation/all of us. I do not expect roads to run at a profit, nor hospitals and if need be, neither the NBN. Do we close hospitals because they don't provide a ROI? Apparently this would be a definite consideration for those with Solitis.

    These are essential services that we as a nation require and yes, communications is one of them! The ROI or lack thereof shouldn't be the "determining factor", in an evolved society.

    But all those with Solitis, only consider the $'s! What a shame the all mighty dollar is taking precedence over the well being and progresion of our nation/us the people... Good thing our forefathers had better insight than we (well you) do.
    RS-ef540
  • "Return on Investment"
    Goodness. It was nearly 100 years before any major players wanted to pressure a government to privatise the Telstra network.
    Infact, if that phrase was so important, then why privatise any public function. IN EVERY CASE the cost to users has soared and so has the cost to taxpayers as there is ALWAYS a government subsidy and there is also a profit function. Not to mention that much of the money and thus profits come from and go overseas, thus impacting on our net balance of payments.
    What about Responsibility and Accountability? What about National Interest and Security. Has anyone not noticed that one of the biggest fires on Black Saturday was caused by the SingTel owned power grid? The Victorian Railway shutdown on Tuesday this week while the (Foreign) owners and the government squabble who is responsible. Tee lack of investment in public infrastructure by private companies is well known, but some how you think that we should leave it to those same corporate mentalities that gave us the current mess and the GFC.
    NO WAY.
    pilotyoda
  • We dont need to spend so many billions for broadband - 43 or 25 or whatever billion.
    Most people already have access to at least 2 Mbits/s broadband. I have access to a cable broadband plan via optus, supposed to offer up to 20 Mbits/s, but tested just now at about 3.2 Mbits. It is enough, I dont need to stream live movies, i can still skype with video fine.
    99.9% of people dont need any more than this, I pay $50 a month for my broadband access with 120G capacity. I have never used more than 10G in any month so far. The NBN will effectively replace all existing cable infrastructure (telstra, optus and other private providers) which was wastefully implemented for tens of billions due to idiot government policies. Now they want to waste more taxpayer money? It is insane - pure and simple. I will not pay a red cent more for my broadband, and expect to pay less in future. I will not move to NBN from my current provider. NBN will never pay enough to pay the borrowing costs of the project. Full stop.
    rayman99
  • Pilotyoda and RS,

    I'm not saying that infrastructure projects should be privately run, what I am saying is that if the government is going to implement them with BORROWED funds (ie our tax payer dollars) then there needs to be an ROI.

    If not, the government needs to borrow even more money for future projects. The more they borrow, the worse our government's credit rating gets. If the credit rating drops, cost of borrowing goes up. We then pay higher taxes.
    mwil19-a34f7
  • supperfreak and mwil19...you are certainly entitled to your views and as such I respect them...

    But please just let me say that you appear to be in the definite minority.

    The only people are are obviously opposed to the NBN are the Liberal party (and their supporters) Family First party and some Telstra stakeholders.

    The rest, interestingly even including the "National party" (the Libs coalition partner) and the "Tasmanian Liberal party"... Plus The IMF, World Bank, Greens, Labor, apparently the majority of big businesses surveyed etc, support the NBN.

    What about the employment opportunities generated by the NBN and the flow on of both the human factor (having a job) and financial benefits of money in the pocket to spend/further stimulate the economy, which never seems to be factored.

    Again, before I move on please let me reiterate - "Last time I looked, Australia the nation was not listed on the ASX" ;-)
    RS-ef540
  • 2Mb is not fast enough for a connected family. Every day the web-pages become bigger (file size) as more ads, flash content, higher res media, etc chew up bandwidth. There is no co-ax in this area and my average ADSL2+ speeds were barely good enough when i got it, but don't cut it now. With higher concurrent sessions happening in peak times the speeds drop off further.
    2 adults doing their thing and 2 teenagers studying HSC and socialising kill it completely. AS for WEB apps, forget it.
    AS content becomes bigger, we keep pushing the limits of downloads. I started with 600MB/256Kb and now have 50GB/full speed (for $40/m). Currently using 25GB, but in the last 8 years have seen average page load times remain static. At this rate my max speed cannot increase without fibre and my downloads should hit 50GB in 2 eyars, after which, without fibre the net will, be useless.
    AS for movie streaming, already not an option here even if free.
    pilotyoda