Time to come clean on NBN costs

NBN Co is presenting a new corporate plan at the end of this month. Could it be bad news for the government?

The original plan from 2010 said that 127,000 greenfield premises would be passed by June this year, with 97,000 of them active. In January, they announced that they had connected just 2315.

NBN Co CEO Mike Quigley told Senate Estimates last week that the original figures were unrealistic and would be revised, along with other assumptions, in the new plan. If the original assumptions were optimistic, isn't it safe to assume, then, that the new plan will have a higher total cost of delivery? How will the government cope with having to impart the news that costs are rising, given their current politic situation?

In this week's Twisted Wire podcast, IBRS analyst Guy Cranswick calls for more transparency in reporting NBN targets, whilst commentator Kevin Morgan suggests that the magnitude of an increase in cost could be considerable.

Higher costs don't mean that the NBN isn't still worth doing, of course. Marco Forzati from Acreo, a Swedish Research Institute, talks through a cost-benefit analysis (PDF) that suggests that the economic advantages of fibre to the home are very marked, particularly in regional areas.

Perhaps, if the government does a better job of selling the benefits, we'll be more prepared to accept a hike in the cost of delivery. But selling has never been this government's strong suit.

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