The cost of implementing the National Broadband Network could blow out by up to $2 billion dollars following a price ruling by the Australian Competition and Consumer Commission.
Opposition Communications spokesperson Malcolm Turnbull is set to take advantage of the ruling as he attempts to “demolish” Labor’s rush to implement the NBN network without any real costing of the network which is tipped to cost between $43 and $55 billion dollars.
On Friday the ACCC issued a ruling which sets the price that Telstra can charge competitors that want access to their network. As a result the NBN will have to charge rates significantly cheaper than what Labor’s adviser, KcKinsey forecast in their submissions to the Federal Government.
The ACCC has recommended a three year freeze on the price that Telstra charges for access to their copper network which is currently charged at $16 a month.
Labor and the NBN Co had hoped to charge $35 a month for wholesale access to the NBN which is relying on access to Telstra’s copper network.
Now speculation is mounting that the Government may want to start fresh talks with Telstra in an effort to reduce the proposed $11 billion non binding deal with the national carrier.
Telstra sources have told ChannelNews that they would not concede to a lower payment while analysts are claiming that the proposed $11 billion dollar payment by the NBN Co is now seen as an “excellent” deal for Telstra.
David Quilty, managing director of public policy at Telstra claims that Telstra are not happy with the draft ruling which will impact revenues from their struggling copper wire network.
According to Telstra calculations the draft prices would see a 24% reduction in wholesale line rentals which is not what Telstra wanted at this stage of the Companies restructure.
Commenting on the NBN for the ABC Malcolm Turnbull said “If, as is very likely, the conclusion is that the NBN, once completed, will have a value much less than its cost we need to have a debate about whether that subsidy is justified by some other intangible benefits. We also need to debate whether those benefits could be obtained by a different, less expensive approach” he said
He added “Above all we must not fall for the proposition that governments should be subject to less rigorous financial scrutiny or accountability than business. Dealing as they are with other people’s money, trustees as they are for the financial security of generations to come, governments must be rigorously transparent and accountable in their investment decisions”.