Only half of the 2 million houses with NBN access are using it

Picture: Getty Images

The NBN Co says it now passes two million premises, with 2,028,504 having access by last week.

But despite that achievement, the NBN has just one million active connections.

The two million figure has doubled access from 12 months ago and within the next two months, NBN Co says around a quarter of all Australian homes will have access to the network.

But the government-owned enterprise is struggling to attract users. Uptake has been relatively slow primarily because of the high costs compared to traditional ADSL plans.

For example, TPG offers unlimited internet on ADSL2+ plans for $69 a month. TPG’s unlimited NBN plan at speeds that deliver a noticeable difference are nearly 50% more expensive at $99 a month.

The NBN also an awareness problem, with many homeowners not realising it’s available to them, and the company mostly relying on telcos to promote its product.

While Telstra is signing up the most NBN customers, TPG’s connecting them to the most higher-speed plan options of any internet provider.

TPG is also building its own super-fast fibre optic NBN competitor aimed at the lucrative apartment market. It’s competing directly with the NBN’s fibre-to-the-basement rollout, which the NBN is hoping will subsidise less profitable connections to rural users.

On Friday, NBN Co will release its financial results for the third quarter, with the Sydney Morning Herald reporting that the company is forecasting $300 million in revenue for the 2016 financial year and $2.4 billion in operating expenses.

That data comes off the back of the 2016 budget, which revealed NBN Co is running out of money, with the last $8.8 billion in public funding to be spent in the next financial year.

Tuesday’s budget warns that the NBN needs to raise between $16.5 billion and $26.5 billion to complete its rollout, and that it might not be as simple as first expected.

“In the event that NBN is initially unable to raise the necessary debt on acceptable terms, interim funding support may be required,” the budget papers say.

“Were it required, additional Government financial support for NBN would have implications for the fiscal position, for example by increasing assets and liabilities on the balance sheet and, depending on the nature of support, could have positive or negative impacts on the underlying cash balance.”

The majority of early NBN rollouts have been the fibre-to-the-premises technology, however NBN Co is looking to roll out more of its technically inferior fibre-to-the-node technology and HFC.

However, experts, including Internet Australia CEO Laurie Patton, are saying that the NBN should focus on rolling at more FTTP in the short term to help bring in more revenue and thus reduce borrowing.

In terms of revenue, one big advantages of a full fibre network is that it’s faster, and based on how the NBN price model works, will allow internet providers to charge less and encourage more customers.

The NBN’s Connectivity Virtual Circuit charge to ISPs, one of the pricing structures of the wholesale network, rewards providers with cheaper access for faster speeds.

In turn, if more customers are using the faster network, they can lower the price for faster plans, encouraging more customers to join NBN plans.

But for now, NBN Co. is lacking that critical mass and the business, focussed on the rollout, offers no forecasts on when they might get there.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.