ACCC chair says NBN should be treated as sunk cost in any efforts to recoup spend

ACCC maintains the 25-50Mbps down and 5-20Mbps up Fixed Wireless Plus plan is sufficient for most households.
Written by Campbell Kwan, Contributor
Image: Cole Bennetts/Bloomberg via Getty Images

Australia's competition watchdog chair Rod Sims has given his two cents on how the NBN should approach recovering its costs, saying that the NBN should be viewed as a sunk cost and decisions should flow from that starting point.

"Now that [the NBN's] built, I think it's appropriate to treat its cost as sunk and therefore, what matters for Australia is getting the best use out of the NBN," Sims told Senate Estimates yesterday.

The ACCC chair was speaking to the NBN's efforts to recoup costs, wherein the company responsible for running the network has previously said it needs to eventually have an average revenue per user of AU$51 to avoid a potential write-down. 

In NBN's FY22 first-half results posted last week, the company said its average revenue per user finally shifted from AU$45 to AU$46.

Debtwise, as of the end of 2021, NBN has AU$17.3 billion in private debt. It also has a AU$19.5 billion loan from the federal government, with AU$7.5 billion of that amount still outstanding.

"Obviously, NBN need enough cash going forward to cover their investment, [it] would be absurd not to do that. But I wouldn't be personally hung up on getting a commercial return on every last dollar spent because I think that's just bad economics. What's the best use we can make of the NBN should drive it provided they've got enough money to do all the things they have to do," Sims said.

In providing that view, Sims said the NBN should prioritise generating enough revenue so it can continue upgrading and investing into the network to meet future demand rather than prioritising making the utmost commercial returns.

During Senate estimates, Sims also maintained the ACCC's view that the 25-50Mbps down and 5-20Mbps up Fixed Wireless Plus plan is sufficient for most families if their needs are working from home and using streaming services at the same time.

In recent releases of statistics on fixed wireless performance by the ACCC, those on the supposed 25-50Mbps down and 5-20Mbps up Fixed Wireless Plus plan have been shown to be barely able to crack the 6Mbps mark for upload speeds, and it has been that way for some time.

The Regional Telecommunications Review, published on Monday, backed ACCC's stance that the plan was sufficient. The review noted, however, that the 6Mbps target and other speed targets needed to be significantly strengthened to meet continual demand increases and network growth.

"This is insufficient for many of the activities higher-bandwidth users are looking to use the service for and inconsistent with the upload speeds available to fixed line consumers," the review said.

When it fronted Senate estimates earlier in the week, NBN said it would be formally lodging its Special Access Undertaking variation with the ACCC in the coming weeks.

"I would expect the ACCC will then consult on that variation. As I understand, it is required by legislation actually, and I would expect them, therefore, to issue a consultation paper and provide a timeline for the process," NBN CEO Stephen Rue said on Tuesday night.


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