The global economic crisis has made the Federal Government's National Broadband Network plan an expensive and risky proposition which end users won't have the money to pay for, one analyst said this week.
The global economic crisis has made the Federal Government's National Broadband Network (NBN) plan an expensive and risky proposition which end users won't have the money to pay for, one analyst said this week.
Guy Cranswick (Credit: IBRS)
"The cost of money has risen and will stay high for some time
to come," Guy Cranswick, advisor at analyst firm Intelligent Business Research Services told
ZDNet.com.au today. "The return on investment is highly
questionable... Why would you make an investment on technology that
is already out of date, in financial conditions which are way below
Apart from the difficulty of getting money, consumers were also
putting their credit cards away, according to Cranswick, and were
unlikely to want to pay a premium for faster speeds. "The evidence
in Europe is that people are cancelling their broadband
accounts," he said.
"I think the virtual collapse of the Terria consortium
demonstrates the unviability [of the network]. Do they
really want to face all of that?"
The analyst highlighted a speech Telstra's CFO John Stanhope gave earlier this month,
in which he said that the crisis would put up the cost of building
the network, and had already started to affect the level of
discretionary customer spend.
Considering that, the analyst wondered what the private thoughts were of
the CFO of Optus, which has been the main power behind the Terria bid,
with the other members of the consortium only "acolytes". "The
question, of course, is how can you withdraw from it if you have
to?" Cranswick asked.
Cranswick believed the national broadband network, which he said was never a great policy, had become politically unimportant alongside other bigger worries,
with the economic situation having changed dramatically since before the
election. "Australians are more concerned about keeping their
homes, keeping their jobs," he said.
"As a government investment there are probably better things
they can do with that money than a national broadband network,"
ABN AMRO telecommunications analyst Ian Martin agreed.
Cranswick believed these problems would cause Conroy to
delay the building of the network by ordering a six-month
moratorium to see what the markets would do, although Ovum telecommunications analyst David Kennedy believed the government would lose too much politically to significantly delay or can the network, which was one of its key election promises.
It has not only been the analysts who have been questioning the network. In a statement, iiNet CEO Michael Malone said that no one in the industry thought the national broadband network was a good investment in its present form.
"It's going to increase prices for customers, with no increase
in speed or performance for the majority of Australians. Some customers
will even see speed drops. But it's being driven by a mindless political
agenda that has nothing to do with customers any more," he said.
"The process is even crazier. In every other country where something
like this has been attempted (Singapore, NZ, Netherlands, UK), the government
has first run a process to work out what the network will look like.
"Once that's been clearly communicated, then the process is begun to tender
(Singapore) or just build it (for the others). In Australia, the government
has everything shooting in the dark, with a clandestine expert panel and a closed
doors ministerial decision to decide everything.
"Tax payers should be rightly
appalled at the idea that the government is embarking on the largest infrastructure
program in a decade, and is doing so with no transparency. The minister hides behind
his own gag order whenever he is asked about the NBN," he concluded.