Hence the need for the government to step in because it is not viable for the private sector to build the NBN in rural Australia.
i.e IT WAS NEVER GOING TO BE BUILT IN RURAL AUSTRALIA BY THE PRIVATE SECTOR.
The NBN pricing was a way around this hurdle. Based purely on cost/demand rural subscribers would ordinarily pay more (much more), but so that everyone gets access to the NBN metro folk effectively subsidise the rural NBN. An outcome that would NOT be possible in the private sector.
No. And it wasn't going to be built by the private sector for the cities either.
Why? Too much capital spend for essentially the same type of speed for the city. Private sector could have just built a regional broadband with some smaller subsidies.
Now, I don't like subsidies, but I can understand there can be a need for them. Perhaps the government could have subsidised a regional broadband where private sector could have been given a small subsidy to make regional broadband viable. So, a 7-8% benefit to private sector who wouldn't have built the network otherwise.
But no. Why did this happen? See, the government originally had a 4.5 billion subsidy for Telstra to build the NBN. But then pollies said, how can we get more political capital out of it? So, they canned the subsidy, meaning they "reduced" the deficit by the subsidy amount (4.5 billion). Telstra would have paid for the rest of the construction costs otherwise.
Then, they created this behemoth of NBN, and gave it so many monopolistic revenues. Here's the thing. Losses by the NBN don't count as much annually, because it's a financial asset as they have loaned the entire capital to NBN. The suck is in because people will eventually have to cop the the losses the NBN has made.
At last count it has accumulated 8.3 billion dollars of losses. Way more than the original 4.5 billion dollars of subsidies. And it's going to come out of your tax dollars which could have been used elsewhere.
"The final cost of the Commonwealth's financing of NBN Co will not be known until NBN Co is privatised and the market places a value on the NBN," the report says. "Until then the Commonwealth will continue to bear an annual cost associated with its financing of NBN Co."
The report goes on to say that if the sale price of NBN Co is less than the cost of financing NBN Co, then the NBN would have "an enduring cost to the budget".
There is also a small risk (less than five per cent chance) that the Government could be forced to meet "contingent liabilities" in relation to the NBN rollout, totalling an amount of $15.5 billion as at 30 June 2016.
Read more at https://www.gizmodo.com.au/2016/12/...y-costing-the-government/#jpYGyrm4I1Hm0YqD.99
Last edited: