The real cost of the original NBN is a lot cheaper than you think

Tuesday 24 October 2017
Nic Crowther's picture
Co Editor
The Shaker

The fallout from Four Corners continues, but there is no doubt that a golden opportunity has been wasted.

While the major parties attempt to sheet home blame to the opposite side, some simple back-of-the-envelope maths puts the cost of the NBN into perspective.

 

 

The original plan

Labor’s fibre-to-the-premises (FTTP) promises to deliver high-capacity optic fibre to 93% of the population. Over time, there were plenty of accusations of cost blowouts, but it is worth noting that NBN Co’s latest estimate for FTTP rollout is between A$72 billion and A$82 billion.

By anyone’s measure, that is a lot of cash.

However, that is to bring a piece of cable to almost every home in Australia. You only need to take a drive into work of a morning to get an idea of what a truly massive undertaking that actually is.

 

 

The Conversation has done some interesting analysis of the cost-per-premises for this version of the NBN. While you can read through it all here, Rod Tucker of Melbourne University estimates that the actual cost would have finally been, at most, $3,700.00.

Again, that sounds expensive.

 

But what about that tram?

Canberra’s light rail project is another that courts its fair share of controversy. As a result of the 2012 election, the ACT Labor Party courted the Greens into coalition with the promise of a new public transport system.

The latest figures – courtesy of the ACT Auditor General – puts the total cost at A$939 million. That might be 0.1% the cost of Labor’s NBN, but the service delivery is entirely different.

 

 

Canberra’s light rail runs from the city centre to Gungahlin via North Canberra. According to the ABS, Canberra has a population of 406,403. However, the two Northside regions – those serviced by the tram – have a total population of 126,000 (53,000 in North Canberra and 73,000 in Gungahlin).

Now, let’s assume that even the most far-flung residents of both regions are actively serviced by a tram running down Northbourne Avenue and Flemington Road. Using the metric of 2.6 people per residence, that gives us a cost-per household of…

…$19,376.

 

 

How about WestConnex?

The jewel in NSW’s road transport plan is estimated to cost $16.8 billion. With an average of 2.0 people per dwelling, and a potential pool of two million people benefiting from the project (a long stretch!) we’re looking at a cost-per-residence of $16,800.

Even if you double the amount of people that receive a benefit, it’s still more than tewice the price of the full-service NBN.

 

 

What are the benefits?

These transport projects are designed to make life easier. However, if last night’s story on the NBN showed us anything, access to more than 100 gigabits is going to be essential in the digital economy.

By any measure, the Coalition’s Fibre-to-the-Node version of the NBN will fail to do the job it was intended to do. For the sake of $2,100 per household, they’ve delivered us an absolute white elephant. At just under half the cost of FTTP, it will deliver less than 25% of the speed and be hugely expensive to upgrade.

Comments