Australia shadow communications minister slams NBN

Australia's shadow communications minister on Tuesday unleashed a blistering attack on NBN Co, warning that the government's wholesale national broadband network is anticompetitive, too expensive, and will result in higher prices for consumers.

"Starry-eyed politicians and staggeringly –expensive technology are a dangerous mix," said Malcolm Turnbull, shadow communications and broadband minister for the opposition Liberal party.

"It has been alleged – and not denied – that NBN was conceived by former Prime Minister [Kevin] Rudd and communications minister [Stephen] Conroy on the back of a napkin, mid-air somewhere between Sydney and Brisbane."

Addressing the audience at Broadband World Forum in Paris, he warned that the cost of rolling out the nationwide wholesale fibre network – which has been estimated by NBN Co at around $37 billion worth of capital expenditure – will pressure the government-owned company into keeping wholesale prices high in order to recoup the investment.

Turnbull also noted that given the lack of competing nationwide wholesale networks, NBN Co will be able to maintain high prices without fear of losing market share.

"If NBN is not able to generate enough revenue then the auditors will require the government of the day to take a haircut (writedown)," Turnbull warned. "Governments hate haircuts."

Turnbull noted that although NBN has pledged to fix the price of its most basic wholesale broadband product for the next five years, it has requested the right to raise the price of any of its more-advanced packages by up to 5% above inflation during any of the next 30 years.

"As a heavily capitalised, government-owned monopoly, NBN has both the incentive and the means to charge high prices," he said.

Turnbull also claimed that Australia's model for deploying a nationwide wholesale network via a state-owned monopoly has not been well received by other countries in the region.

"It is very uncomfortable to sit with telecoms executives in China and be told that the NBN approach would not find favour in their country because, and I quote, 'we are seeking to promote competition in telecommunications infrastructure'," he said.

"I haven't been to Pyongyang to discuss broadband opportunities…but I imagine our approach would be welcome there," he added.