Not only is the cost of connecting already too high for most, costs of building it are rocketing up, while the alternatives get cheaper and faster with new technology.
Kevin Morgan warns that the Gillard Government $36 billion national broadband network already seems to be blowing out badly: (h/t Bolta)
In Tasmania, where the network was first switched on, the take-up rate is less than 15 per cent. Worse, the cost of deploying what little fibre has been rolled out is double the estimate contained in NBN Co’s first corporate plan. That November 2010 plan estimated it would cost $2300 to pass each household with fibre but the progress report suggests it is costing $4700 with connection adding a further $1000 per household.
If those construction costs cannot be reined in and were repeated for all 12 million premises, then the NBN’s capital cost could blow out by $28bn.
In April, NBN Co ended negotiations with 14 contractors hinting there was collusion and price gouging. It’s small wonder there couldn’t be a deal given the vast gap between what the government has budgeted and actual costs.
No one, of course, is pointing out that the NBN’s costs could explode. Why would they when NBN Co’s 900 employees are averaging more than $150,000 a year? And the gravy train doesn’t stop there. Consultants, lawyers and IT contractors are doing even better. In the 12 months to June, NBN Co spent $60m on consultants and a whopping $42m on legal costs while $220m has been spent or committed to a billing and operational support system even though NBN Co will be dealing with at most only a couple of hundred customers. And this cost could double.