The release of the outlined business case last week waved a few red flags in front of my eyes. Could they at least put my mind at rest by releasing a few prices?
On this week's program I raise a few concerns about the range of products outlined in the cut-back version of the NBN business case released to the public last week. If they are a true Layer 2 provider, shouldn't NBN Co just have one product for a wholesale connection to the premises? Perhaps two, if we include a separate telephone service. Yet the business case outlines five products. Is NBN Co trying to find incremental higher value wholesale product offerings to build a business case that will ultimately pay for itself?
My concerns could easily be put to rest if NBN Co released the price assumptions in its spreadsheets that led it to conclude that it will provide a rate of return beyond the average government bond rate?
Industry analyst Paul Budde doesn't know what I'm concerned about. He says in this week's program that the company will have to charge a realistic price or no one will buy it. That's true, but what if its assumptions are wrong?
I wonder whether a smarter approach might have been to accept from the onset that a base fibre network might not pay for itself, but will provide incremental benefits for the economy. The problem is, it might not provide those benefits.
It's been a positive week for the government, NBN Co, and the industry at large. Maybe now some of the sensitive legislation is passed it's time to open the books and let us get a clearer picture of what's being built and how much it's going to cost.