|So now that we are heading towards a recession with the prospect of a $100 billion dollar deficit over the next 4 years, our Dear Leader has decided to quadtriple the size of the National Broadband Network project to $43 billion bucks. Originally the project was "only" going to cost $9b, with $4.5b coming from the Government, but now the $4.5b will just be an initial payment. How much is the taxpayer going to end up paying for this monsterous white elephant of a project, $20b plus? WTF are people going to use all that bandwidth for anyway ... surely if the demand was really there then business would build it of its own accord? I don't know about you lot but don't want my taxes being flushed down the toilet by a Government making the old mistake of trying to pick winners.
Broadband price rise tipped under $43b plan
Posted 2 hours 50 minutes ago
Updated 2 hours 17 minutes ago
Massive project: analysts are astonished at the upfront cost. (Reuters: Hannibal Hanschke, file photo)
Video: PM announces broadband scheme (ABC News) Audio: Market rocked by Government announcement (The World Today) Audio: Press conference: Kevin Rudd unveils broadband plan (ABC News) Audio: Opposition slams Government plan (The World Today) Audio: Federal Government ditches broadband policy (The World Today) Audio: Tanner takes critics to task (The World Today) Audio: Dr Bill Glasson on the Government's national broadband network plan (ABC News) Related Story: Broadband plan 'a massive broken promise' Related Story: Rudd redraws broadband landscape Related Story: Tas gets first 'byte' at new broadband Related Story: Broadband network 'must accommodate rural needs' Related Story: Telstra defies downward market trend Related Story: Phone lines restored in NT Related Story: Disappointment over national broadband plan Related Link: Factbox: Key points about national broadband network Market analysts say broadband prices are likely to rise, after the Government unveiled an amibitious new $43 billion plan to build a national fibre-to-the-home broadband network.
Prime Minister Kevin Rudd has scrapped the broadband tender process in favour of forming a public/private company to build and operate a network which will cost over four times the amount of the original $9.4b proposal.
Mr Rudd says the network will take eight years to build and give 90 per cent of Australian households download speeds 100 times faster than they currently experience.
The 10 per cent of homes not covered by fibre-to-the-home will get upgraded wireless access.
But analysts are astonished at the upfront cost and say they have concerns about the network's commercial viability.
"I've got no idea what's driving the Government to do this," Ivor Ries, an analyst with EL and C Baillieu Stockbroking, says.
"They're saying a network that will deliver 100 megabits per second, that would exceed current household consumption by a factor of 100 times.
"[That] allows you to download several channels of television at the same time.
"[So] what it will do is create a market for people selling downloads to homes - people selling movies for downloads to homes will obviously be big winners from this.
"But is it going to provide some sort of magic shot in the arm to productivity? Probably not."
Mr Ries says the new network is only financially viable if 80 per cent of Australians choose the access provided by the new cables rather than wireless internet access.
"If they get only 60 per cent of the population using it, and people preferring wireless over this new cable, then the monthly access fee they're going to have to charge people will be prohibitive," he warned.
"At the moment the average Australian household is spending about $40 a month on accessing the internet.
"Whereas this proposal will require the average household to be paying somewhere round about $75-85 a month.
"So you're talking there about a $35 to $45 a month increase in the cost of basic access for the average household."
BBY Stockbroking senior analyst Mark McDonnell says it is hard to see how the private sector could make a return on such an expensive project, unless broadband prices rise significantly.
"It's both audacious and paradoxical," he said.
"The paradox being that if you can't find private sector support for a proposition around building a fibre-to-the-node network which might have cost $10 to $15 billion, let's up the ante and make it $43 billion and still ask for private sector support.
"How's that going to happen?"
But telecommunications analyst Paul Budde says Australians are getting top-level technology without waiting for a commercial company to provide it, even if home use will only be part of the new network.
"You have to look at it in a totally different situation," he said.
"You talk about the use of the infrastructure; not just for internet. You talk ab