There has been a lot of bellyaching of late about whether or not the National Broadband Network (NBN) will be a viable proposition or not. Certainly, the purported cost of $43b is a lot of money, and when dealing with a sum of that magnitude, a certain level of caution is very obviously quite prudent.
Supporters of the network point to the potential flow-on effects to the Australian economy – increased productivity, environmental benefits – the list is almost as limitless as the imagination can muster. Opponents say that the huge price tag is far too much, and that a full cost-benefits analysis needs to be performed before we earmark the funding for the project. Others say the analysis is not needed.
These are strong arguments either way. For myself, the biggest thing missing from the debate is any simple, rational exploration of what the numbers might be. So I’m going to give it a bash!
The starting numbers look like this: approximately eight million premises to lie within the fibre footprint of the network over eight years – (or ninety six months) – and that is growth of about 83,333 premises within the footprint per month.
Assuming an uptake of around 70% of premises within the fibre footprint opting to use the NBN, the subscriber base will grow by around 58,333 every single month across the eight year rollout. Assuming rough parity with current wholesale access pricing for our existing ADSL/ADSL2+ network(s) of around $25.00 – (about what is expected) – the revenue base grows by $1,458,333 every month.
Presuming that the numbers are maintained across the eight year life of the rollout, the total number of subscribers connected in the 96th month will be 5,600,000, generating $140,000,000 of revenue per calendar month. Or if you like, $1,680,000,000 per year. Yes, that is 1.68 BILLION dollars.