NBN blowouts warned as Turnbull sets new expectations

Up to 300,000 premises have been left off the National Broadband Network (NBN) fixed-wireless rollout, representing an AU$1.2 billion coverage gap, according to Communications Minister Malcolm Turnbull.

As part of one of the six reviews into the NBN since the election, NBN Co has been examining the fixed wireless and satellite rollout for the 7 percent of premises that are not covered by the fixed line footprint of the network.

Speaking at the CommsDay Summit in Sydney today, Turnbull said that while NBN Co was not yet prepared to release the report, there were material problems with the project, with a material underestimate of the likely demand, a lack of spectrum in the fringe metropolitan areas for the long-term evolution (LTE) fixed wireless network, and more premises in the wireless footprint by 2021 than planned in NBN Co's corporate plan.

"The project as planned would not be able to service an estimated 200,000 to 300,000 premises outside the fixed line footprint," he said.

"Those plans understated the growth in houses outside the fixed line footprint."

As such, take up on the fixed wireless network is expected to be between two and three times what is planned, from 230,000 to between 440,000 and 620,000 premises, he said.

A total of 320 wireless towers covering 80,000 premises would not have sufficient spectrum to deliver services, Turnbull added. The costs all added up, he said.

"Taken together, if the NBN were to take steps to eliminate the 'coverage gap', the company faces a deterioration of operating cash flows of its satellite and fixed wireless networks of up to AU$1.2 billion by 2021."

He said NBN Co was exploring joint-venture options with the private industry to reduce the cost for the NBN wireless and satellite project, but said it was unlikely that the operation of that portion of the NBN rollout would be sold off in the short term.

"There was virtually no possibility that NBN Co would be able to offload any under performing asset to the private sector."

New expectations

Turnbull announced that he and Finance Minister Mathias Cormann today issued NBN Co with a new statement of expectations for the NBN that formally tasks NBN Co with taking a technology-neutral approach to delivering faster broadband.

"The statement is consistent with the government's view that rather than imposing technological constraints on NBN Co, politicians are better placed telling the company what objectives, both technical and financial, it should pursue, and how much government money they have to achieve them," he said.

The statement (PDF) directs NBN Co to roll-out a wholesale-only, cost-efficient, multi-technology mix network with discretion over the rollout and technology used so long as it stays within an AU$29.5 billion public equity cap. 

NBN Co must provide a minimum 25Mbps download speed, and a "proportionate" upload speed to all premises, and 50Mbps to 90 percent of premises "as soon as possible".

This comes despite one year ago today Turnbull and now-Prime Minister Tony Abbott promising 25Mbps to all Australians by 2016 and 50Mbps by 2019.

TPG filled the gap

Turnbull said that the government would await the findings of the Michael Vertigan cost-benefit analysis panel's report before announcing its intention around TPG's fibre to the basement rollout. He claimed that TPG only began rolling out fibre because Labor's fibre-to-the-premises rollout was taking so long.

"I should note that had the previous Government allowed NBN Co to deploy VDSL in apartment buildings and office buildings, many if not most of the buildings targeted by TPG would have been serviced already by NBN Co," he said.

TPG only made the announcement of fibre to the building after the election, but when asked about whether TPG was acting in response to the change of government, Turnbull said it was more about the delay.

"They certainly wouldn't have been doing it if there were NBN FSAMs in those buildings already. What I'm saying is that the opportunity exists because you've got these MDUs with no service, and as you know the NBN Co has had enormous difficulty taking fibre to the premises in MDUs," he said.

He said TPG may not have wanted to roll out fibre to those buildings if NBN Co had managed to roll out fibre to those buildings. 

Turnbull would not confirm when NBN Co may reach an agreement with Telstra, but said that it was a more collaborative, constructive environment than had existed between Telstra and the government in the past.

"I'm not sitting there every day at the table, but it is going very well and I think there is a really new atmosphere of collaboration between Telstra, the NBN Co and the government," he said.

"For this thing to work, we have to have a really good relationship with Telstra."

Turnbull today also announced that the MyBroadband website had now been updated to include a speed test page that will collect data on the speeds experienced by residents across Australia.

Turnbull said data from this new function would go towards determining the underserved broadband areas in Australia that will be prioritised in the new NBN rollout.