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Government advised to accept 'sunk' NBN costs

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Communications Minister Paul Fletcher has blamed the costs of the NBN on the Labor Party (Image by Dan Jensen)

The head of the ACCC has delivered a bombshell recommendation to the Government on recouping the costs of the NBN, writes Paul Budde.

OVER THE LAST YEARS, I have written many articles for Independent Australia in which I argued that the high costs for building the NBN have at least partly to do with the party politics that have been pursued by the Government.

As soon as Tony Abbott announced that the NBN should be killed, the issue became political and has stayed so until this day. Without bipartisan support, the NBN became a political football and the changes made to the original plan and consequent adjustments have resulted in significantly higher costs than the original plan.

In the end, after all the backflips from the Coalition Government, the latest adjustments to the NBN upgrade means that we are back on the original fibre-based plan. However, all the detours, backflips and bandages have resulted in extra costs.

The Government has ordered NBN Co to recoup all of those losses through the subscription prices to the users. In the end, the NBN users are paying for party politicking that has been taking place over the last decade.

This is also very easy to do for the Government as the NBN has come very close to being a state monopoly. Users hardly have any alternative than to use the government-built national broadband network at prices dictated – through Government demands – by NBN Co.

I have also indicated that the Government should write down certain costs in order to provide more affordable subscription rates for all Australians. In the end, even this Government has concluded that the NBN is essential for Australia (despite Tony Abbott's view to the contrary). The COVID-19 pandemic has driven that message down to even the most conservative politicians.

Now, about the bombshell.

Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has mentioned during a recent Senate Inquiry that it would be “bad economics” to seek to recover “every last dollar spent” on the rollout of the National Broadband Network.

He clarified:

“Obviously, the NBN was built by the Government and now that it’s built, I think it’s appropriate to treat its costs as sunk — what matters for Australia is getting the best use out of the NBN.”

So finally, people such as I who have argued for this for years feel supported by the ACCC. It is, however, highly unlikely that the Government will immediately bend over and accepts Mr Sim’s suggestions. On the contrary, I expect that the Coalition will again dig in its heels and will still be using the NBN as a political football.

It is hard to see Communications Minister Paul Fletcher changing his strong political stance on this. Even after being in control of the NBN for nearly a decade, I would not be surprised if he keeps blaming all of NBN’s woes on the Labor Party.

Together with Rod Sim, I would argue that what matters is the national interest and not national pity politics. However, that might be wishful thinking so close to the Federal Election.

It is very clear that the NBN is a critical national infrastructure and is as important as water, gas and electricity. It should be provided at the lowest possible costs so that all Australians have affordable access to good quality broadband providing them with tele-health, tele-education, work from home, online government services, online business services, banking services and so on.

To allow the Government to recoup the extra costs as a result of party politics through increased consumer broadband costs is in my opinion totally unacceptable.

Looking after the national good should be the prevailing policy, not the party politics that has caused the NBN to be far more expensive than would have been if such politics would have been left out of it.

Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.

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