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Publisher's Letter

The NBN is looking more like a white elephant

Every time another report appears on the National Broadband Network it inevitably becomes another piece of evidence in the monumental folly that this project has become. That the Federal Government can still blithely proceed with a project with a projected cost of 43 billion dollars but no cost/benefit analysis seems incredible enough. Then it was announced that the NBN rollout in Tasmania would be strung pole-to-pole rather than underground, repeating the mess that was made years ago with cable TV.

Now, it appears that not enough people in Tasmania are taking up the service as it becomes available. Apparently they either don’t need it or it is too expensive, or both. Well, we are not surprised. For most people, present broadband internet services are probably adequate. While just about everyone who logs on and downloads stuff would like it to be faster, they are generally not prepared to pay substantially more to save a small amount of download time.

So what can the government and the NBN authority do to increase the take-up? One proposal is that people might be forced to take it up if they want to keep their existing fixed line phone service. Apart from being a most unwelcome draconian approach, it also ignores what is presently happening out there with fixed-line phone services – people are abandoning them, as they have been for years.

In fact, several of my own relatives have recently abandoned their fixed-line phones, figuring that their mobile phone plans made the fixed line unnecessary. Furthermore, they don’t bother with fixed-line internet services either since they have 3G internet as part of their mobile plans. In effect, they are always “on-line” and they like being able to connect at any time, without cables.

When 4G mobile services become available, the move away from fixed line services is likely to become a stampede and it will make the NBN even less viable. Virtually anyone with a mobile phone knows about 3G and knows that much faster 4G services are not far away.

So if the government and the NBN authority think that they can force-feed their potential customers with this service, they are horribly misinformed – as usual!

In any case, part of the deal with the NBN is that the government has decided to pay Telstra a cool 11 billion dollars to transfer its fixed-line customer base to the NBN. No doubt Telstra is anxious to do this as soon as possible – before the customer base deteriorates much more and its revenue continues its inexorable slide.

In fact, Telstra’s fixed line revenue is being squeezed on two sides. As noted above, domestic customers are giving up their fixed lines and on the commercial side, more and more businesses are converting to VOIP services, as we recently did in the SILICON CHIP offices. It has more than halved our telephone costs. Multiply that trend in thousands of businesses across Australia and you can see that Telstra has a grim future as far as fixed-line revenue is concerned.

There is little doubt that the whole situation involving the NBN and
Telstra is a mess – a government-created mess. Let us hope that the government finally sees reason before the rollout begins in earnest on the mainland. It should abandon the NBN and forget about paying Telstra $11 billion, even though that will massacre Telstra’s share price. It should then let Telstra and its competitors get on with providing internet and phone services – and let the cards fall where they may.

Leo Simpson


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