NBN recently announced a blow out worth up to $15 billion in the cost of building the project, citing more accurate data and delays in connecting customers to key technologies.

This in turn has led to questions about whether the NBN can afford to fulfil its pledge of reducing the amount it charges internet service providers, such as Telstra and TPG Telecom, while still turning a profit and staying off the federal budget.

While $29.5 billion in taxpayer-backed funds will be spent to help build the NBN, this is not included in the budget deficit because it is seen as an investment rather than expenditure. But this will change if the NBN fails to make a profit.

Ovum research director David Kennedy was commissioned by NBN to author detailed reports into the project. He said the broadband network would definitely see taxpayers lose money.

"The taxpayer is certainly not going to get a commercial return on its equity investment – absolutely not – and I believe it'll lose money for the taxpayer," he said. "But if they handle it as a write-down of capital then they can actually put it in a profitable situation.

"Somewhere along the line here, there will be substantial write-down of taxpayer capital. It's inevitable."

NBN plans to get the rest of the money needed to complete the project, up to $26.5 billion, from private sector sources such as bank borrowings and bond raisings.

"When they go to the debt markets they're going to have to explain how bond holders can expect a return and the only way that can happen is if the equity is written down," he said, adding it could be justified as a social investment.

Rural and regional builds unprofitable

NBN director Simon Hackett told Fairfax Media that one of NBN's biggest cause of high costs was its unprofitable rural and regional build, while emphasising his comments reflected his personal views.

He said he was a strong supporter of getting broadband to the bush but added it should come in the form of a direct subsidy or asset write-down to relieve pressure on the company's need to get a return on investments.

Writing down billions of dollars in rural and regional NBN assets would help improve the project's profitability without impairing broadband in the bush. It would also help prevent the whole $29.5 billion equity injection being forced onto the Budget.

"When it comes to the regional network there's got to be an argument like that [in favour of a write-down]," he said. "The regional piece is something you do because you believe it is good to have Australians able to live in regional areas and that's a social policy decision, not a technology decision.

"The bipartisan federal policy is that the NBN is to be treated as a commercial investment that must make a return, and my personal view is that the investment is being expected to produce a return too fast and as a result it puts pressure on the amount of income it has to make early on."

NBN chief executive Bill Morrow said any decision on writing down taxpayer investments was entirely up to the government.

"It's a government call if they ever decide to do that [from] the Department of Finance," he said. "We would know if there was intentions of doing that and we've not had any discussions.

"We would not recommend it and we don't believe that anything is going to happen at least in the near term."

Communications Minister Malcolm Turnbull declined to comment.