blog The debate about how much annual revenue the National Broadband Network Company can eventually look forward to has always been a wee bit complicated for mere mortals like myself to understand. That’s why I’m glad that telecommunications commentator Michael Wyres has boiled it down substantially in a new post on his blog (which is very worth subscribing to).
As Wyres points out, we can get a basic guesstimate of what NBN Co’s revenues will eventually look like through calculating the known inputs into the company’s yearly sums. It’s pretty hard to calculate the variable amount of NBN Co’s pricing — the connectivity virtual circuit or CVC — so Wyres has put together a very basic calculation including only the known access virtual circuit (AVC) pricing.
Quoting from his blog post:
“The NBN will eventually cover approximately 12,000,000 premises, so lets do some really simple maths — and presume that only 50 percent of all premises take up a service, and they all take up only the basic service:
Yes. That is 1.728 BILLION dollars of revenue. In a year. If 50 percent of people take up a basic service. Before we add in CVC pricing. Of course, NBN Co has to spend some of the money maintaining the network, and paying its employees – (so it’s not “profit”) – but $1.728bn is a lot of money.”
When you look at things like this, you start to realise that even the absolute minimum amount of money which NBN Co will be pulling in post-2020 when its network is complete is actually quite a large amount. It’s quite easy to foresee both higher levels of take-up on the NBN than 50 percent and the fact that many (most?) users on the network will be using higher value plans rather than the absolute minimum option. In addition, once you factor in that ISPs will be paying NBN Co a stack for CVC pricing to feed backhaul data traffic to users, as Wyres says, “the numbers look pretty rosy”.
Personally, my issue with the NBN has always been the fact that it will recreate a new monopoly in Australian telecommunications, and reduce infrastructure-based competition between ISPs. I’ve always known the NBN would ‘make money’ in terms of pure revenue. However, what Wyres’ analysis gives us is a very quick picture in brief of what that pure revenue would look like post-2020, as an absolute minimum. And for a national infrastructure project of this nature, damn; it’s not bad.