It needs to make a profit of $250/year on revenues of $360 and raw costs of at least $125: the Maths fail.
There are multiple extreme commercial risks for an FTTN (or Hybrid Fibre-Twisted Pair), not the least being:
- aggressive, targeted marketing by mobile service providers like Telstra with 4G plans.
- Loss of premium customers to "On-Demand" Fibre or competing fixed-line networks.
Those prepared to pay more for premium services will find other solutions and only "laggards" and lowest-revenue subscribers are left to share the whole of the maintenance costs. Telco network maintenance costs are mostly "fixed" and must be shared across all subscribers. With fewer paying subscribers, the costs per-subscriber increase, eroding profitability. For an "inferior" service with low revenues, higher costs can't be recouped with higher prices.
This double-whammy is what caused IBM to move from successive record profits to two years of the largest corporate losses ever in the USA in 1991/2.
The combination of low Revenues, increasing per-user costs and aggressive competition will make the service uneconomic. This is disregarding interest and other costs. Once a "Death Spiral" is locked in, the only commercial option is to close down the company and get what you can for the assets.
Coalition Figures, unsubstantiated and carefully selected:
- 8.968M lines at $900/line
- $8 billion
- 75% of $11 billion Telstra payments
- $8 billion, either as OpEx or CapEx
- Break-even: $16 billion
- Expected subscribers, 70% of lines passed (NBN Co Corporate Plan average)
- $2,500/sub break-even, without Interest.
- $250/year over 10 years.
- 2021 ARPU (in 2012 dollars)
- OpEx (for node or including Copper Plant. Not clarified)
- $127/year/subscriber for 6.25M subscribers