NBN Co 'historical curiosity' plan shows improved FttP rollout

An unreleased September 2013 draft of NBN Co's 2013-16 Corporate Plan suggests the previous board adjusted for rollout difficulties.

NBN Co scaled back its fibre-to-the-premises (FttP) rollout projections for the National Broadband Network (NBN) twice, but was still confident that a predominantly FttP rollout could be completed on budget by the end of calendar 2021, a previously unreleased draft of the company's Corporate Plan 2013-16 has revealed.

The company's 2013-16 Corporate Plan was in draft status, given the impending election. A draft known as Version 12 — dated June 2013 — was published by Fairfax Media (PDF) in September 2013.

NBN Co's former executive team substantially revised its projections in a subsequent version 13, dated September 2013 — after the new government had been elected — but that updated version of the 2013-16 plan was never formally released by incoming Communications Minister Malcolm Turnbull.

Version 13 of the draft, obtained by ZDNet and branded as an "historical curiosity" by NBN Co, shows that the company was reining in its forward estimates, extending the rollout by six months to compensate for earlier delays, and factoring in over AU$3 billion in projected savings from improvements under NBN Co's "Project Fox".

The 2012-15 plan had projected that 551,000 NBN services would be connected by the end of FY2014, but v12 of the 2013-16 downgraded this figure to 402,000, and v13 cut this further, to 238,000.

The government's Corporate Plan 2014-17, released this week, showed that the actual number to the end of FY2014 is 210,628 — a difference of just 11 percent.

Rather than incorporating the revised figures, however, subsequent analysis has instead compared performance on the figures in the 2012-15 plan, which are higher and were set before the project ran into a series of logistical showstoppers in 2012 and 2013.

Those showstoppers — including issues such as contractor management and remediation of the asbestos found in Telstra's copper access network pits — were addressed in the v13 draft, which outlines a more conservative set of forecasts for completion of the former Labor government's predominantly FttP rollout.

Rollout targets in v13 were cut significantly from the 2012-15 plan, when NBN Co forecast that it would have passed 2.912 million premises with fibre and connected 1.515 million premises by the end of FY2015.

Version 12 cut this target to 2.45 million premises passed and 1.147 million connected, but these figures were cut again in Version 13, with expectations that by FY2015, the fibre rollout would have passed 1.740 million premises and been activated at just 715,000 premises.

NBN Co's new Corporate Plan 2014-17 has projected that 1.03 million properties will be serviceable by that point, and 481,000 services activated by the end of FY2015, although the government has heavily qualified its forecasts by saying that it cannot forecast with "a reasonable level of confidence" beyond the next 12 months .

 

2012-15

2013-16 (v12)

2013-16 (v13)

2014-17

Revenues to CY2021

AU$23.1b

AU$21.7b

AU$19.4b

AU$18b

Total capital expenditure

AU$37.4b

AU$37.4b

AU$37.4b

AU$30b

Total premises covered

13.176m

13.176m

13.274m

Not specified

Total premises activated

8.286m

8.757m

8.788m

Not specified

Opex to CY2021

AU$26.4b

AU$26.4b

AU$26.9b

AU$27b

Funding: Government equity

AU$30.4b

AU$30.4b

AU$30.4b

AU$29.5b

Funding: Debt

AU$13.7b

AU$15.2b

AU$13.8b

AU$12b

IRR

7.1%

7.1%

7.1%

3.2%-5.4%

Rollout method

FttP

Build drop FttP (NBN 2.0)

Build drop FttP (NBN 2.1)

MTM

Total premises passed by end FY2015

3.664m

3.202m

2.507m

1.093m

Revenue and expenditure forecasts in the unreleased v13 were also more conservative, with expectations that revenues through CY2021 would total AU$19.4 billion. This is well down from the 2012-15 forecast of AU$23.1 billion, and nearly in line with the AU$18 billion that NBN Co now forecasts will have been generated by the NBN by the end of FY2021.

This figure would be higher still, as NBN Co's previous draft had adopted a calendar year nomenclature to account for the six-month delay added to compensate for rollout delays.

Despite those issues, v13 of the draft confirmed that NBN Co was confident even after the 2013 election that it could complete the original FttP rollout for the AU$37.4 billion outlay originally forecast. Operating expenditure through 2021 was slightly higher in the adjusted version, rising from AU$26.383 billion in the v12 draft to AU$26.905 billion in the v13 draft.

The v13 draft was "an historical curiosity [that] was never considered by the board and never endorsed by ministers", an NBN Co spokesperson told ZDNet. "So it has no status."

Many of the cost-saving process and technology improvements highlighted in the document, however, have been adopted in the current rollout as NBN Co works to bring down its cost. Current NBN Co CEO Bill Morrow previously confirmed with ZDNet that the Project Fox improvements were subsequently incorporated into the rollout.

NBN Co has called the search for process improvements business as usual; however, questions linger over the results of a trial of new construction techniques in Melton, Victoria. NBN Co still has not completed a review into that work, which was promised in September.

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