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National Broadband No-go?
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gemsling
I wonder how this NBN plan is going to end up being structured. I just read an econimic analysis of the plan suggesting that retail prices would have to exceed $200/mth to make it work. And that's assuming 80% take-up. Eek!
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I've read some rebuffs of that argument. It goes on the assumption the government want a ROI on the project.

But they're doing this as a national infrastructure investment, and will then be wholesaling it. No one will "own" it for making profit off the wholesale overall infrastructure.

My understanding is that, therefore, it is the resellers like us that determine the price we want to charge for the connections.

No one ever talks about data though, and the NBN does nothing to change the way data costs are structured, that I've ever read anyway.

More from the article that reported the analysis:

SOCIALISE LOSSES?
Asked by CommsDay if prices could be reduced if the government was able to keep prices low and move losses onto taxpayers, Ergas thought this was not possible. “The Competition Principles Agreement [between state and federal government-Ed] requires government owned entities to earn returns commensurate with those required by their privately owned competitors,” he said. “NBNco is assumed to have a 15% weighted average cost of capital which the European Commission has suggested is a reasonable weighted average cost of capital for NBNs.” The Concept calculations also estimate that by using a gigabit passive optical network configuration, the total capital cost is likely to be in the order of $40-50 billion. “Adding operating costs over the construction period leads to around $60-70 billion. If start up losses are capitalised, then the costs are obviously greater,” Ergas said.

AUSTRALIA’S WORLD BEATING SUBSIDY:
CommsDay also posited that the government might be able to raise its contribution to the NBN to reduce prices, but Ergas said that the current proposed government contribution was already the highest proposed in the world—twice that of the next highest, Greece, and considerably higher than other countries with stimulus policies such as the USA and South Korea. He also suggested that the NBN not only be viewed in terms of whether its benefits exceeded its costs, but whether alternatives might generate superior benefits. “Even if the benefits of the NBN were greater than its costs, if the net benefit would be even greater with say an FTTN network instead, the NBN being an alternative to the FTTN, then evaluated properly, the NBN would fail a cost-benefit test, as the incremental benefits of the NBN compared to FTTN would be less than its incremental costs. In other words, costs and benefits need to be defined in opportunity cost terms, relative to the set of relevant alternatives.”

Beyond the snippets I pasted from the article, my understanding was that it would be owned by an entity only 51% government owned. Getting others to invest (whether through bonds or shares or whatever) might rely on convincing them that there'll be a return.

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