Developers think NBN fibre is free: Opticomm

Developers think NBN fibre is free: Opticomm

Summary: Fibre network company Opticomm has said that developers incorrectly believe that NBN Co's fibre installation in new housing developments is free of charge.

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Opticomm CEO Paul Cross has said that developers mistakenly believe that the NBN Co is offering to roll out fibre to new housing developments for "free", not taking into account the costs of digging pits for the fibre.

As part of the National Broadband Network (NBN) roll-out, NBN Co will provide fibre to new housing developments with over 100 lots, as long as the developer builds the duct and pipes to NBN Co specifications.

NBN Co has been inundated with applications from housing developers seeking to get the National Broadband Network (NBN) fibre rolled out to their greenfield sites across the country. As of May, this year, NBN Co CEO Mike Quigley told a Budget Estimates hearing that NBN Co had received about 2500 different applications from developers, comprising 130,000 premises in total. NBN Co has signed up Visionstream and Service Stream to cope with the demand.

NBN Co will not disclose the actual amount per premise, but CEO Mike Quigley has previously said it is well below the $3000 per-premise that Opticomm claims.

Speaking at the launch of the new Opticomm fibre network in Drouin, Victoria, CEO Paul Cross said that his cost per premise to developers was AU$1500. He said that, while he had picked up a bit of work from developers, some believed that NBN Co's offering was free.

"There is a belief, I think, within the development community, that the NBN is a free network. Obviously, we've shown there are significant costs of rolling out this free network, and that the private sector can compete competitively in that area," he said, adding that a number of the applications he was getting now are from developers that are fed up with waiting for NBN Co.

"We've had a number of developers who have previously looked at going with the NBN, and have now changed their minds and have come back to private providers, because they can guarantee a date that they will be online and they can guarantee the services that will be provided," he said.

Cross said that he believed he was able to keep costs lower than NBN Co through the design specifications for the fibre roll-out.

"We are far more in tune, I think, of was is required in the estates. We've spent a long time in the planning for this; we're not working towards a design that NBN [Co] are using, which we believe is cost prohibitive. So we've selected more efficient ways of delivering the network."

But Cross admitted that bringing in backhaul links to the new housing site was an additional cost on the project. Where NBN Co rolls out its own backhaul, Opticomm leases from Optus.

"The nearest back hall was over 5km away for us, so we've had to bring a 5km lead-in fibre into this estate."

Shadow Communications Minister Malcolm Turnbull was also at the launch of the fibre network.

Turnbull said that NBN Co was imposing additional costs on developers through the pit and pipe, while telling them that the fibre was free.

"[Developers] say they have no choice; they're obliged to go for the NBN and of course, they're told that NBN [Co] will then do the installation for free to the developer — obviously not free for the taxpayer — but the developer's got to put in the pit and pipe. But the pit and pipe is a very expensive part of the equation, in and of itself, and of course, the way NBN [Co] specifies it is very expensive."

Topics: NBN, Government, Government AU, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

30 comments
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  • Not Taxpayer

    The Costs borne by NBNco are are not borne by the Taxpayer.. The NBNco Capex is funded by loans that are fully paid for by the returns it gets from Wholesale Sales.. Just like Telstra.
    The developer has the choice of provider to install infrastructure, and the NBNco is the provider of last resort, as planned..
    Paul Grenfell
    • Its nothing like Telstra, more old Telecom

      NBNCo gets 100% of it's funding from taxpayer guaranteed loans; It's taxpayer money.

      They forecast a return 7+%; from a company that has not met a single forecast thus far (greenfield connections under 1% of corporate plan 1 predictions).

      Telstra is a publicly traded company, with limited liabilities - none burdening taxpayers (although they still have significant ownership of shares in the future fund).

      Surprising the NBNCo doesn't detail their pricing when price providers are prepared too;-)
      Richard Flude
      • Tax payer?

        Err once again... taxpayer guaranteed loans (your words) are NOT taxpayer monies. They are taxpayer risk.

        Just as you being a guarantor for another to obtain a loan isn't your money. It's your risk, ONLY if the person you are guarantor for defaults.

        So as you say - "NBNCo gets 100% of it's funding from taxpayer guaranteed loans", ergo, the NBN is NOT tax payer funded.

        Also, after telling us since this thread, that NBNCo have "bought out all of the competition", tell us again that the NBN won't be a success, LOL.

        Anyway... even though the NBN is NOT tax payer funded, what exactly is the problem if it was. Don't we pay taxes so that the government (amongst other things of course), can build much needed infrastructure for us, it's tax paying citizens?

        What were those qualifications you 'claimed' you have again...?
        RS-ef540
  • Quality Journalism.

    Communications Minister Malcolm Turnbull was also at the launch of the fibre network.
    NPSF3000
    • Typo

      My bad. Will fix.
      Josh Taylor
  • Quality?

    Josh, that should be "Shadow" Communications Minister Malcolm Turnbull
    Paul Grenfell
    • Typo

      We had that in a different place as Shadow but the shadow part got dropped in the move. It's been fixed. Thanks.
      Josh Taylor
      • What the hell is Turnbull doing there?

        As someone who has consistently bad mouthed the NBN and tried putting up ridiculous arguments as to why we don't need it, I have to ask - what was he doing there? Perhaps looking for a chance to sabotage it?

        A lot of conservatives believe MT to be a viable alternative as party leader, but as long as he subjugates his intelligence to the demands of Tony Abbott's Luddites R' Us party, he does more harm to his reputation.
        Tony_McS
  • $3000?

    Where did that figure of $3000 come from? And the $1500 figure doesnt include backhaul..
    Paul Grenfell
    • Sure?

      The $3000 figure was clarified by NBN Co, so I have adjusted that. It's close to the same amount as Opticomm, they say, without giving specific details.

      As for the backhaul, I believe Opticomm is including that in their sums.
      Josh Taylor
      • Nope

        Nope, $1500 does not include backhaul..
        Paul Grenfell
        • My apologies

          My apologies Paul, you are absolutely correct. Just double-checked the transcript and you're right on that but I did say this in the article:

          "But Cross admitted that bringing in backhaul links to the new housing site was an additional cost on the project."

          Must have slipped my mind.
          Josh Taylor
      • Besides

        Besides that, its the developers responsibility to find a provider.. NBNco is the provider of last resort, not first..
        Paul Grenfell
        • Last resort

          As is mentioned in the article linked to in the second paragraph. Based on the amount of applications NBN Co has gotten, they're not being treated as the fibre provider of last resort, you will have to agree.
          Josh Taylor
          • True

            True , but thats the Developers choice.
            Paul Grenfell
  • So...

    Developers are "fed up" waiting for NBNco? That's very interesting isn’t it. We can now safely assume that fibre is in demand. If it weren’t in demand people living in these greenfield areas would be jumping onto wireless plans since according to some "the internet is becoming a wireless internet".
    Hubert Cumberdale
    • So indeed HC

      Surely they (greenfiled citizens) are demanding copper, so that they can then connect to MT's wonderful FttN...!

      The Coalition's farcical argument has more holes than all the swiss cheese, do nut and life saver makers combined.

      Yet their faithful pawns will argue they are right:/
      RS-ef540
    • Provider of last resort .....

      Josh - you are spot on re provider of last resort - they are not. Take a look at the ruling put out by the Productity Commission where they found a prima facia case against NBN co for using public money to compete with the private sector - with the actual proof being so far over the horizen it was difficult to make a direct ruling against them. In their words the definition provided by Government/ NBN was really strange and did not mean provider of last resort even though the words were used - no doubt to ram that bit of legislation through as well.

      I guess the main take home though is that despit NBN Co's/ Conroys efforts the private sector are still providing great FttH services (with more connected customers than NBN Co at a fraction of the cost) and this will benefit the end customers and the taxpeyer as just a little less to pay back on bad loans provided by the current government. What a pity that funding - as similar deferred payment, low interest loans is not provided to the private sector.

      One thing that did not come out in the article - it leaves the popint open that the very expensive FttH architecture adopted by the NBN Co could somehow be better - this is not the case - it is archaic and will be a nightmare to maintian.
      Rossyduck
      • Err

        Hmmm, government owned and run is no good eh Rossy.

        Yet you use the Productivity Commission (a Gov't dept) as your star witness...LOL
        RS-ef540
        • Now the Productivity Commission is no good

          Can we get a list of acceptable information sources?;-)
          Richard Flude