The cost of scrapping the NBN

In Coalition shuffling feet on broadband "Jack the Insider" has an interesting point on the cost of scrapping the NBN if the Coalition win Government at the next election:

By the next election, the Commonwealth will have invested $15 billion into NBN Co. Should the Coalition win the next election and NBN Co.’s windows are boarded up as promised, standard accounting practices dictate that the $15 billion invested will have to appear as a line expenditure item in the Budget.

It is entirely possible that the Commonwealth could sell NBN Co.’s fibre assets in various locations around Australia to a telco of one stripe or another but it would be at a bargain basement price and significant contractual penalties would be payable.

Put another way, the Coalition, already committed to $70 billion in savings over the forward estimates, would have a further $15 billion to find.

None of that would be good news for Joe Hockey.

But it gets worse because Coalition policy would effectively shut down any sort of broadband roll out for at least five years. Citigroup estimates six months will be spent on the preparation of the cost benefit analysis the Opposition insists they need, two years will be needed to complete all contractual negotiations with stakeholders, including Telstra and Optus with a further three more years to be spent completing a necessary separation of Telstra. The policy won’t be implemented until 2018.

The cost to the Commonwealth? Citigroup puts it at $16.7 billion. Put in the $15 billion already spent and we’re getting close to the overall cost of the NBN: $35.9 billion.

So the Coalition’s policy is just a little cheaper but the concern is that it won’t even be half as good, will effectively ignore the existing structural problems in Australia’s telecommunications architecture and leave regional Australia in the dark yet again.