The Department of Communications estimates the value of the NBN based on the depreciated current replacement cost less the present value of leave and superannuation. It should now turn to using net present value of discounted future cash flows; as it does now for Australia Post. In doing that, it should not assume that average revenue per users will rise at the rate needed to recover costs but assume levels that reflect the market (especially competition from wireless broadband). It is likely that the fair value revealed by this DCF estimation will then lead to a write down in equity.
Previous columns have been about the structure of NBN prices. This is about the current and future level of NBN prices. See Economuse 2017-10-10
This is my tenth annual review of the retail broadband market in Australia. It is interesting to observe how the market has evolved since 2008 and to speculate where it could go next. See Economuse 2017-09-27
Professor Rod Tucker and I may disagree about the NBN’s technology mix but we have found common cause in the problems with the current business model and how to fix it.
We argue that the volume of data transferred should be the basis of wholesale charges for the NBN, not the bandwidth provided to the user.
We also argue that all users should have full access to the bandwidth capabilities of the particular technology connecting their premises.
For more, read How to fix the NBN
It is not generally appreciated that the nbn™ has never claimed that CVC is backhaul. It says it is only a pricing construct. This is a follow-up to last week’s column ((the Blame Game – Cutting teh Gordina Knot) explaining how CVCs introduces congestion when it does not have to. There is a better way to charge for usage that will unleash the economic potential of the NBN. See Economuse 2017-8-10