NBN Co tips increased costs, 6-month delay

NBN Co tips increased costs, 6-month delay

Summary: NBN Co has today released its revised corporate plan, outlining new roll-out targets and expected costs and revenues for Australia's NBN.

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TOPICS: NBN
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NBN Co has today released its new corporate plan, showing that the capital cost for the National Broadband Network (NBN) has increased to AU$37.4 billion, and that the network will be completed six months later than scheduled, in June 2021.

The new "Operational Plan", released by NBN Co CEO Mike Quigley and Communications Minister Stephen Conroy in Sydney today, sets new targets and lays out the expected costs for the NBN's roll-out across Australia.

The original corporate plan released in 2010 has been disregarded by the company, because the roll-out of the network was delayed due to delays in signing an AU$11 billion agreement with Telstra to decommission the copper network and lease ducts and pits to NBN Co for the roll-out.

The new corporate plan indicates that due to an agreement with Optus to shut down its hybrid-fibre coaxial (HFC) networks, an increase from 14 to 121 points of interconnect and expected upgrades to the satellite and fixed-wireless network, the cost of the network has gone up from AU$35.9 billion to AU$37.4 billion.

Operating expenditure has also gone up, from AU$23.2 billion to AU$26.4 billion, and revenue has decreased slightly to 2021, from AU$23.7 billion to AU$23.1 billion, but NBN Co is predicting a slight increase in the rate of return to 7.1 per cent from 7 per cent.

NBN Co is expected to begin construction to pass a total of 758,000 premises across Australia by the end of this year, but the overall roll-out of the network has been delayed by six months, to June 2021.

The company is also expecting to accelerate the capital expenditure of the network, because instead of waiting for the owners of premises to indicate that they want the NBN before the fibre is rolled out to their premises, NBN Co will now roll it up to the door in the course of the roll-out. Quigley denied that this is implementing an "opt-out" policy for the NBN, but admitted that people could only stop the fibre from being rolled to their premises by requesting it.

This method is expected to be more cost effective.

There is expected to be a reduction in expected equipment costs, thanks to architectural optimisation, volume/price arrangements and in rolling out the fixed-wireless and satellite services, but there will be an increase in construction labour costs, as well as additional costs for multi-dwelling units and IT systems.

The battery backups for the network-terminating devices will now be optional for all residents, and customers will be able to decline to have one installed if they wish. The government came to this decision after consulting with industry and emergency services, and, as a result, NBN Co predicts that just 50 per cent of residents will take the backup batteries. Quigley estimated that this will save the company hundreds of millions of dollars.

More details to come.

Topic: NBN

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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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30 comments
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  • Missleading sentence

    I would highly recommend you correct this sentence:

    "but the overall roll-out of the network has been delayed by six months, to June 2021."

    It should say "but the overall roll-out of the network has been delayed by six months, now scheduled to be FINISHED by June 2021."
    GTRoberts100
    • Not misleading

      Hi MyBlueRex,

      I disagree that it is misleading. The roll-out is all-encompassing, so saying it is delayed by six months is accurate. In fact, the start was delayed by nine months. They've just managed to cut that down to six months at the tail end of the roll-out.

      Regards,

      Josh
      Josh Taylor
  • Batteries aren't needed!

    Can't use the computer when the power's off, so who needs the network if the powers down, it's simple give everybody that doesn't have a moblie $20 mobile from samsung1
    Kevin Cobley
    • Not true

      You may not need a battery backup, but that's certainly not true for everyone. Batteries are not about ensuring you can still call your families and friends even if the power is down, but about ensuring an elderly person with some form of 'help, I've fallen and can't get up' panic button still gets a response. About your back to base alarm being able to call out during a blackout. I'm sure there are others I've not mentioned, but there are plenty of circumstances where a mobile just doesn't cut it as an alternative.
      Stu Brown
      • Replacing a phone system with one unavailable in a blackout

        Yep this is going to be a real success. Battery backup was added for this reason, now it is "optional"; people deciding often in no position to understand why it is required.

        Latest NBNCo plan had 13,500 premises connected by June, forecasting 92,000 by mid-2013. 2010 plan predicted 419,000 premises connected by June 2013 (not even 25%, and these are their predictions). Greenfield sites even further behind.

        Remote connections running at $14,000 per connection (yes, not a joke).

        Retiring perfectly good infrastructure for a $50+ billion government monopoly; what could go wrong;-)
        Richard Flude
        • "perfectly good infrastructure"

          LOL
          Hubert Cumberdale
          • Copper phone network that worked in situation its replacement wont

            A HFC network delivering same 100mbs speed.

            Over $20 billion in infrastructure retired for no reason other than to protect a new monopoly provider.
            Richard Flude
          • "A HFC network delivering same 100mbs speed"

            False. It is a redundant network incapable of delivering the same speeds (both down & up) that the NBN will achieve with ease to 93% of Australian premises.


            "Over $20 billion in infrastructure retired"

            Good. Retire it. I don’t care. Why should I? It's not available in my area or the MAJORITY for that matter. Not very competitive. Secondly you have to justify running this HFC network while there is a far more capable one. Not very efficient, it's a waste of time & money due to higher power requirements. Do you believe consumers should pay more for something vastly inferior due to this?


            "for no reason other than to protect a new monopoly provider."

            Booo hoo? When it comes to wholesale communications infrastructure a monopoly is perfect. Plenty of competition at retail. Two problems solved with one solution. You should be happy. The NBN works. Deal with it.
            Hubert Cumberdale
          • Actually, it's about $12 Billion

            According to the ACCC, it's costed the copper at $12 Billion- this is mainly according to what Telstra can ACTUALLY make off the copper services. And HFC is, essentially, worthless as it's already been written down. Yes yes, why then pay for it in the NBN? Because it gets more customers on it faster, increasing revenue for NBNCo.

            Plus HFC covers 30% of the population....but can only PHYSICALLY handle around 12% of it without hundreds of MILLIONS being spent on it to node-split....and it can't do anything better than 5Mbps upload even WITH upgrades....so yeah....great infrastructure.

            And the copper? It can get MAXIMUM 100Mbps down and around 5Mbps up out of it IF you live within 300m of a node via FTTN....so that would require around 120 000 nodes for 93% of the population, at about 7 000- 10 000 maximum able to be built in a year....so around 15 years....

            So please, tell me again why we should continue using this "perfectly good" infrastructure?
            seven_tech
          • Why? Because it doesnt cost $50 billion

            Nor does it restrict competition to a monopoly provider, and exists today.

            The failure of the last plan should be enough warning. The latest shows expenditure (cap and op) up, revenues down but still higher return on equity (govt guaranteed of course).

            Monopoly has never been a better model in communications; the Australian market under telecom demonstrated it. "Retail competition" a joke.

            Clearly some will spruke the NBN regardless of cost, delay or exposure to taxpayers.
            Richard Flude
          • I wonder what it feels like to be that misinformed.

            "Because it doesnt cost $50 billion"
            1) The NBN doesn't cost 50 billion, it pays for itself therefore it costs nothing.
            2) Even if the NBN didn't pay for itself, FttN would still be more expensive thanks to the cost of buying and maintaining the already ailing copper network.

            "Nor does it restrict competition to a monopoly provider"
            Yes it does. Why don't you google FttN box images, and you'll see how big the ones in the UK are. Then consider that's only with BT communications equipment (dslams) in them, image how vast they would need to be to house competing equipment in them as well, it's just not plausible.
            And that would only be to provide ISP competition, which the NBN does anyway and which we have already today in most of Australia. FttN would still be all Telstra infrastructure, it would still be a 1 infrastructure provider system.
            karl_w_w
          • clarification

            "cost of buying and maintaining the already ailing copper network"
            or paying Telstra to bring it up to a quality that can support FttN speeds that are any higher than current ADSL speeds, and maintain it. The Liberals have indicated that's what they would do, they seem to enjoy handing taxpayers' money over to private business.
            karl_w_w
          • I wonder what it feels like to be that misinformed?

            If you knew what that was like Karl, you could well be our next PM ;-)
            RS-ef540
          • Sigh

            But it does restrict ACTUAL competition Richard.

            Because HFC is not open access and Telstra own the copper network, exchanges and Telstra are liable for repairs thereof, others simply utilise or resell Telstra.

            Nobody in their right mind would consider an ISP placing a DSLAM into a Telstra exchange and accessing Telstra's network to be actual infrastructure based competition. Nor having non open access HFC available from two companies (one who already owns the rest) to a select few, as wonderful competition.

            Seriously this was the bane of comms for many years and why there were court cases, ACCC breaches. Basically it was a dog's breakfast.

            There was a similar argument at Delimiter recently where another, to suit his similar political cr^p at the time, said on the one hand HFC is proof that competition in Oz is flourishing. Then minutes later, to suit the same political lies, said Optus have neglected their HFC and relied on access to Telstra's copper instead..., you guys are precisously, desperately contradictory.

            So I'll ask again, since you avoided previously .

            1. Which is better for consumers, the choice of one copper based 'Australia wide' provider and two HFC providers only available to iirc, 30% of Aussies. Or 4 or 5 Australia wide RSP's reselling vastly superior products at the same or less price, available to everyone in Australia?

            2. When you go to buy an item (any item) do you care who the wholesaler is (or if they have sole distributorship/monopoly of that item) or do you go to several retailers and get your best price from the retailer?

            Be honest, now (even only once - I promise it won't hurt)...!

            Exposure to tax payers...

            You just can't quite admit you were wrong and the NBN is NOT funded by taxpayers, so now you say exposure...

            Fair enough - at least you are now finally correct with one point (and one only)... it is tax payer risk - not tax payer funded - thanks for the claytons admission.

            Much like if I go guarantor for my brother to buy a house, I take the risk of him defaulting, but I do not pay unless he defaults. However, if I do not have a clear indication that he is capable of repaying, why would I go guarantor?

            Enter the government going guarantor for the NBN which is costed, has Corp and Biz plans and is being rolled out and will according to all projections at hand, be a success.

            Sure there WILL be hiccups, even an ultra- conservative who can't see past his own wallet would understand that. Because this is the largest infrastructure build in our history, do you actually believe regardless of who is at the helm...

            Here's a classic line from a Delimiter poster - it's ironic the short-sightedness of some who wish to keep wringing every last drop out of such a past visionary build as the copper network.

            If it was up to people like you Dick, we would have a copper network, would we?
            RS-ef540
          • addendum

            wouldn't ;-)
            RS-ef540
          • Hello Richard

            Still awaiting an answer or two please Richard.

            Just to reiterate...

            1. Which is better for consumers, the choice of one copper based 'Australia wide' provider and two HFC providers only available to iirc, 30% of Aussies. Or 4 or 5 Australia wide RSP's reselling vastly superior products at the same or less price, available to everyone in Australia?

            2. When you go to buy an item (any item) do you care who the wholesaler is (or if they have sole distributorship/monopoly of that item) or do you go to several retailers and get your best price from the retailer?

            As man with all the answers (cough) I await your pearls of wisdom (ahem).
            RS-ef540
          • Never mind Dick...

            Your continued and unending silence is answer enough...
            RS-ef540
          • Seriously Richard

            Mate, you really need to pipe down. You are unfortunately mis-informed. Please read ALL white papers on NBN Co web site about projected INVESTMENT and RATE OF RETURN. Copper is adequate? Maybe where you live buddy, not for the vast majority of us in areas where Telstra's copper is of crap quality, but not only that, pair gained and RIM'd to shit because they can't be bothered themselves replacing/putting more in the ground to cope for new people and always looking for a way to spend a cent over a dollar, due to the shareholders no doubt, resulting in "barely there" connections.

            True, the initial outlay (not COST, OUTLAY) has gone up slightly but it is not even $40b yet, so can everyone just stop using that stupid $50b figure that is complete and utter FUD spruiked by the coalition and simply lapped up by the likes of Mr. Flude.

            Return on investment figures are up from 7% to 7.1%. I know you may laugh at a 0.1% increase, but once migration is through, you can give me 0.1% of millions or billions in revenue a year any day and twice on Sundays.

            You do not need or want this Richard, we get it. Now please sit down and let informed and intelligent beings discuss this like adults. Most of us speaking here DO need the NBN. We're not all as lucky as you.
            Ramrunner-5dd3e
          • I've never read so much rubbish in my life

            The NBN is guaranteed by taxpayers, every cent raised and spent. If it was a commercial proposition it could go into the Marie and raise the money; it can't.

            The closest the NBN will get to a 7.1% return is their business plan. It's previous business plan failed in every area, surviving under 2 yrs.

            The NBNCo is retiring competitive technologies to restrict competition. And push everyone onto its infrastructure. This infrastructure represents considerable value, ten of billions paid to acquire then retire it.

            White papers aren't worh as much as experience, I've plenty. I mentioned the failures before the business plans release, confirmed by it. The same names telling me before hand how uninformed I was. Still unable to admit both the cost and the failures correctly identified.

            What is the maximum of taxpayers money the dreamers are prepared to risk - at least then we'll have a cap to this insanity. I suspect it will be unlimited.

            Fortunately saner heads will prevail and dump this govt before much is rolled out - a Whipping of QLD proportions because of their incompetentce. Hopefully the incoming govt will hand it back to the private sector.
            Richard Flude
          • "The NBNCo is retiring competitive technologies to restrict competition. And push everyone onto its infrastructure."

            Great news. So in other words you dont have to worry about the "taxpayers". Thanks for stopping by...


            "The same names telling me before hand how uninformed I was."

            You still are and refuse to educate yourself, are you a Liberal MP?



            "I suspect it will be unlimited. "

            You suspected it would be cost taxpayers "$50 billion" that has proven to be false time and time again so the real question is are you able to admit you were wrong?


            "Fortunately saner heads will prevail and dump this govt before much is rolled out"

            You are confident this will happen so why are you here debating this at all?
            Hubert Cumberdale