12 Oct 2012

Pulling out of the NBN would cost the government $2.3b

Any future government that decides to pull out of the National Broadband Network will have to pay $2.3 billion to Telstra in order to cover contract obligations. This is $500 million more than previously revealed. The NBN Co equity agreement between the government and NBN Co terminates in 2021 and stipulates that should the government abandon the project, the Commonwealth Government would need to pay $2.3 billion to Telstra to fully cover costs. At this stage in the project, more than 25,000 homes and business have been given the deadline of April 2014 to switch over to the NBN before their telephone and broadband services on the copper network are switched off for good. The locations range from Brunswick in VIC, Kiama in NSW and Townsville in QLD. All will be given 18 months from November 23 to transfer their internet and phone providers to NBN approved services. The network itself is set to cost $38 billion, with $27billion of that from tax payer investment (meaning that the tax payer will eventually get that money back). In terms of business, the NBN is set to have huge benefits. A Cost Benefit Analysis was performed in Japan, which concluded that the benefit would be around $200 billion over a decade. It is estimated that telecom companies would see around 45% of that boost, but other industries would see the other 55%. The NBN means that many retail companies will be able to provide services on similar service levels, able to offer lower prices and bundling with their existing products.