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    Turnbull warns of price rises under NBN

    Author: Jordan Chong Source: AAP
    Wednesday 18th April 2012

    Opposition communications spokesman Malcolm Turnbull says the high cost of building the national broadband network (NBN) is likely to lead to increased prices for internet services.

    Mr Turnbull says the experience of other services supplied through government monopolies, such as electricity, showed prices would have to rise in the years ahead.

    "Don't be fooled. Don't swallow the nonsense that an overcapitalised government monopoly is going to lead to lower prices," Mr Turnbull told delegates at the telecommunications industry's CommsDay Summit in Sydney on Wednesday.

    "A heavily capitalised government monopoly is not going to reduce prices. The reverse is far more probable.

    "You cannot suspend the laws of economics any more than you can suspend the laws of physics."

    NBN Co is the government-funded corporation created to build and maintain the government's $37 billion high-speed broadband network.

    Its chief executive, Mike Quigley, told a parliamentary inquiry into the NBN on Monday that NBN Co's wholesale pricing construct "has led to a very competitive retail pricing in the market now".

    Mr Turnbull on Wednesday highlighted the high capital expenditure for building the network as well as the significant ongoing maintenance costs once it was built, as detailed in a report prepared for the government by corporate advisory firm Greenhill Caliburn.

    The report, which became public in late 2011 after a freedom of information request from The Australian newspaper, estimated NBN Co would have to spend $14.7 billion of capital expenditure between December 2020, when the project was due to finish, and 2028 due to ongoing maintenance costs and upgrades.

    Mr Turnbull said projections from NBN Co's business plan showed it planned to keep wholesale fixed-line revenue at 0.25 per cent of gross domestic product until the mid-2020s.

    This meant wholesale average revenue per user would increase from $37 currently to $64 in 2023, a rise of more than six per cent annually, he said.

    "That compares with a real fall of seven per cent per year in the cost of services over Telstra's copper network since 2000," Mr Turnbull said.

    "Australians who have been used to paying less and less for broadband are now going to find themselves paying more in both real and nominal terms."



    Tags: NBN, Turnbull
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    Based on information provided by and with the permission of the Western Australian Land Information Authority (2014) trading as Landgate.