Tassie NBN unviable alone, pricing to rise

The Liberals' plan to axe the NBN and leave existing services in place would never work because Tasmania's NBN would be unviable without current high levels of cross-subsidisation, Senator Stephen Conroy argued in a far-reaching speech after which he also confirmed that Tasmanian NBN access prices are certain to rise in the near future.

Stephen Conroy (Credit: David Braue/ZDNet Australia)

Warning that Tony Abbott "will wreak havoc" on the NBN if he's elected and that many Tasmanians are "absolutely frantic" about the prospect of the NBN being axed, Conroy poured cold water on the belief that the Tasmanian towns currently hooked up to the NBN would be able to retain their services even if a Liberal win saw the mainland NBN project discontinued.

"The momentum for the NBN in Tasmania is unstoppable, but the Tasmanian NBN is not financially viable in its own sense," Conroy explained, speaking to an audience of around 200 business and IT industry leaders at an Australian Information Industry Association (AIIA) lunch in Melbourne.

"It has to be part of a national network. The entire wholesale pricing model that will ultimately be in place is based on a cross subsidy between the more populous areas of Australia and the less populous areas of Australia. It is, unashamedly, a cross subsidy. So if you don't do the rest of the network, there's no one to cross-subsidise Tasmania."

Abbott has repeatedly said he will stop construction of the NBN if elected, but will honour existing contracts — which would imply a continuation of the Tasmanian NBN build. But Conroy's implication is that the Liberal Party's mooted changes would require significant ongoing funding to keep the Tasmanian leg of the NBN live, as well as any other mainland components that have been contracted out come election day.

Opposition communications spokesperson Tony Smith was contacted to clarify whether Liberal policy includes subsidies to preserve existing services, but had not responded by press time.

Even with cross-subsidies in place, however, Conroy confirmed that Tasmanians can expect the price of NBN internet access to rise when current honeymoon rates — offered by the likes of Primus, Internode and iiNet — run their course.

"I don't think these will be long-term prices," Conroy said. "When you see NBN Co set a wholesale price at a national level, you'll get a better indication of what the prices are."

Internet service provider (ISP) heads have previously flagged the potential for price changes, with Internode managing director Simon Hackett previously suggesting that current prices "may bear little resemblance to what emerges under the NBN proper".

Even with final pricing up in the air, Conroy was still happy to beat the drum of competition, arguing that providers' one-upmanship in Tasmania — ISPs fought a brief but heated price war as NBN carriage rates were announced in recent months — was reflective of the way competition would drive down prices across the entire NBN.

"We will have 100 per cent of all fixed-line customers using the NBN," Conroy said. "The price isn't an issue any more, because you will see price competition for the first time at a retail level... And you've got to remember: when you switch off the copper, you don't need to pay line rental any more [as with most ADSL2+ plans in the market]. By and large most Australians still pay the $30 a month, so these are serious savings, and serious competition coming into the marketplace."