NBN Co warned last year that “accelerating” competition from mobile broadband endangered the National Broadband Network’s (NBN) market share and profitability.
It’s easy to see why. A typical NBN download speed of 50mbps costs roughly $85 per month, but Optus and TPG provide Fixed Wireless Access 5G broadband at the same speed but for $10 to $15 less.
Fixed Wireless Access 5G internet has also taken a sizable market share away from New Zealand’s vastly superior NBN-equivalent infrastructure “Spark”.
Thus, the NBN is becoming increasingly uneconomic as 5G competition grows.
With this background in mind, it is unsurprising to see new data showing that thousands of Australians have ditched the NBN following recent price hikes approved by the federal government.
Connections to existing homes declined by more than 30,000 in 2023, according to NBN data, marking the first time the service has ever lost consumers in that category.
The NBN’s satellite division also lost 12% of its client base in 2023.
It comes after retailers were permitted to raise prices by up to 10%.
Customers who use the NBN should also expect another price increase in July.
To generate a commercial return, NBN Co’s massive fixed costs (expected to be $57 billion by 2024) require the vast majority of Australian homes sign up.
However, as more households abandon the NBN in favour of wireless alternatives, these fixed costs are being spread across a smaller user base – a situation that will only deteriorate if the NBN continues to lose market share.
The NBN’s underlying poor economics will inevitably worsen as mobile technologies improve and continue to take market share.
