The abysmal economics of the National Broadband Network (NBN) have been laid bare by the thousands of Australians who have ditched the NBN for cheaper options.
Data published by NBN Co. show that there were 7,157,136 ‘brownfields’ premises activated on the NBN as of January 18, 2024, down from 7,172,704 on October 26, 2023, a decline of 15,000.
This follows a 30,000 decline in NBN connections to existing homes in 2023.
The NBN is facing intense competitive pressure from wireless 5G broadband as well as Elon Musk’s Starlink satellite internet system.
Telstra, Optus, and TPG each offer fast Fixed Wireless Access 5G broadband, which can provide high data transfer rates and minimal latency at a lesser cost than the NBN.
For example, a typical 50 Mbps download plan on the NBN costs around $85 per month, whereas Optus and TPG provide Fixed Wireless Access 5G broadband at the same speed for $10 to $15 less.
Starlink connects people in distant locations all over the world, including the majority of Australia, using a constellation of hundreds of low-orbit satellites.
It was released in Australia in 2021 and provides unlimited data for $139 per month plus a hardware price of around $599, with speeds equal to NBN’s 100-megabit plans.
Therefore, some households are switching from the NBN to other options, a situation that should continue as both the 5G and Starlink footprints expand.
In October last year, the Australian Competition and Consumer Commission (ACCC) approved changes to wholesale NBN pricing that reduced prices for the highest and lowest speed plans while increasing prices for the 50-megabit plan, used by nearly half of Australians.
According to the opposition’s communications spokesman, David Coleman, these modifications have led to an increasing proportion of users abandoning the NBN entirely.
“The NBN is losing customers at an alarming rate. 2023 was the worst year for the NBN in its history, with tens of thousands of Australian families getting rid of the service”, Coleman said.
To achieve a commercial return, NBN Co’s huge fixed costs (estimated to reach $57 billion by 2024) require the majority of Australian households to sign up.
However, as more households quit the NBN in favour of wireless alternatives, these fixed costs are distributed among a smaller user base.
The NBN’s inherent poor economics are certain to worsen as alternative technologies advance and gain market share.
