How much for the NBN? I previously estimated a whole of life cost of around $80 billion. IT consultant Dave Stevens writing in The Australian lays out three horrific fiscal scenarios:
Bad
Take the best-case example. Assume a budget overrun of only 10 per cent of the capital cost ($47.3bn), an adoption rate for households and businesses of 60 per cent (more than 100 per cent of current broadband subscribers), a yearly running cost of $800 million, a 15-year lifespan and a wholesale charge of $50 a month per connection, and the NBN loses more than $1bn a year, costing taxpayers $64bn.
Really Bad
More likely, the budget overrun will be 15 per cent ($49.45bn), the adoption rate 45 per cent (still more than 100 per cent of current broadband subscribers), the running cost $900m, the wholesale price $45 and the lifespan 12.5 years.
After interest and depreciation, that’s a running cost of about $8bn a year, $4bn of which comes back in connection fees, creating an investment that loses $4bn a year, or $100bn over its life.
Terrible
In a worst-case scenario, with a capital overrun of 20 per cent, an adoption rate of 30 per cent, a $40 a month wholesale price per customer and a 10-year life, the network loses $7.3bn a year, or $124bn in total.
The fact that the government skipped a cost-benefit analysis, cancelled the private tender process and took the NBN off the budget financial statement speaks volumes about how much the NBN will cost tax-payers. Are the three ex-Nats independents listening?