NBN challenges lay ahead: report

Challenges include difficulty of achieving a return on investment, pricing

The federal government is under increasing pressure to control access prices following research claiming the National Broadband Network (NBN) may lose a third of its users to wireless broadband.

The government has come under heated criticism over claims it may charges users up to $200 for NBN access to make the network profitable within its eight-year timeframe.

Phil Harpur, senior research manager at Frost & Sullivan, said the government will struggle to make the NBN profitable without injecting more public funding.

“The whole landscape will change and it’s difficult to determine an adequate ROI, but the bottom line is it’s going to be very expensive; however, the price will come down,” Harpur said.

Frost & Sullivan's latest Asia Pacific market insight predicts that the proposed fibre-to-the-premises (FttP) can deliver significant long term benefits to Australia's economy, but it warns that the NBN will face a number of challenges.

These challenges include the difficulty of achieving a return on investment (ROI), pricing for NBN access, and the growing migration from fixed line to wireless Internet access.

The firm predicts that by 2013, around 30 per cent of all broadband users will be reliant on wireless 3G services, which could potentially reduce the subscriber base for the NBN.

“In ten years time, we expect traditional telco services such as broadband access to account for a very small percentage of the total revenue generated via the NGN (next-generation network),” Harpur said.

“The full benefits will come from the services supplied via the network, and these will continue to flow for a number of decades beyond the completion of the project. Perhaps the best way to look at the NGN is to consider it a stepping stone to the ultimate goal of an FttP network.”

The research includes consideration of a possible Telstra split, and while Harpur remains confident this will take place, he remains mum on whether the split will be functional or operational.

“New CEO David Thodey is a positive for both Telstra and the industry, he seems to be very well liked within Telstra and I know the unions consider his appointment a very positive approach,” he said.

“It puts Telstra in a strong position because Thodey will put it into the best position to be able to work with the government on working out issues such as the NBN.”

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