Time to come clean on NBN costs

Time to come clean on NBN costs

Summary: NBN Co is presenting a new corporate plan at the end of this month. Could it be bad news for the government?

TOPICS: Broadband, Telcos, NBN

NBN Co is presenting a new corporate plan at the end of this month. Could it be bad news for the government?

The original plan from 2010 said that 127,000 greenfield premises would be passed by June this year, with 97,000 of them active. In January, they announced that they had connected just 2315.

NBN Co CEO Mike Quigley told Senate Estimates last week that the original figures were unrealistic and would be revised, along with other assumptions, in the new plan. If the original assumptions were optimistic, isn't it safe to assume, then, that the new plan will have a higher total cost of delivery? How will the government cope with having to impart the news that costs are rising, given their current politic situation?

In this week's Twisted Wire podcast, IBRS analyst Guy Cranswick calls for more transparency in reporting NBN targets, whilst commentator Kevin Morgan suggests that the magnitude of an increase in cost could be considerable.

Higher costs don't mean that the NBN isn't still worth doing, of course. Marco Forzati from Acreo, a Swedish Research Institute, talks through a cost-benefit analysis (PDF) that suggests that the economic advantages of fibre to the home are very marked, particularly in regional areas.

Perhaps, if the government does a better job of selling the benefits, we'll be more prepared to accept a hike in the cost of delivery. But selling has never been this government's strong suit.

Tell us what you think on the Twisted Wire feedback line — 02 9304 5198.

Topics: Broadband, Telcos, NBN


Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • The time to have brought up the question of the NBN folly was many years ago. The compounding interest clock has been ticking and will continue ticking over the next decade, meaning that taxpayers will unknowingly be lumbered with a massive off budget debt. By then the culprits would have gone walkabout.
    Vasso Massonic
    • Poor VasMas, as a NWAT/TLS/anti-NBN apostle, who needs to bag everything Labor and everything NBN, you really don't get much right do you?

      You bought the TLS junk bonds expecting to be able to purchase that harbourside mansion next to Nicole and Keith, only to find the junk bonds plummeted...oh!

      Now, even though after being told your junk bonds would bounce markedly with an NBN agreement and you arguing until your face turned blue that they wouldn't (and look NOW VAS MAS) you still can't accept facts and let sleeping dogs lie...can you?
  • Really Vasso? Your comment is based on the assertion that it is 'folly'. Until you can prove the same, then your post is simply rhetoric. As for your suggestions regarding economic/accounting penalties, perhaps you could mount a more credible argument rather simply positing facile assertions. Your claims of an off budget debt rest on debunking the corporate plan for NBNCo. Perhaps you could start there.
    • Folly in the sense that the project was conceived on a short flight between Rudd and Conroy on the back of an envelope and took off from there. The expressions on the Twisted Wire podcast attest to the real worry responsible taxpayers have always had about this project.

      Undertaking an intricate technological project of this size on an off budget method of accounting thus devoid of budgetary controls on the pretext it will turn a profit would not be contemplated by the bravest commercial entity, but I leave what can happen to your imagination.
      Vasso Massonic
      • Seriously Vas Mas, if Conroy did plan the NBN on the back of an envelope on one flight, as you suggest, he is a ****ing genius.

        Because in one fell swoop, he has eclipsed the Coalitions broadband plans via three or four ministers and three or four shadow ministers over some 10 or 15 years, in just a few hours.

        Being so, I'd suggest if you believe your claim to be factual, instead of bowing to your hero Sol Trujillo and far right politics, you instead bow before Conroy (someone who with his filter is not a hero of mine) but a politician who is obviously immensely more intelligent than any from the opposing side and yourself...!
      • Uh Huh. So you confirm you believe in the claims made by Terry McCrann (if memory serves.) Yep! the total overhaul of Australia's telco infrastructure and regulatory environment was conceived, notated, and signed off on a napkin during a plane flight. Sorry Vas, but your credibility just took a huge hit.
  • And while I'm at it. Who the bloody hell is Kevin Morgan and why should his opinions be taken seriously? Sure he was involved in the Govt and the telco industry 20 yrs ago, but since then ??? Disappeared to SA for a few years and then popped back up here again. All he's done since has been anti NBN. When Morgan can establish his credibility then perhaps he will be worthwhile listening to.

    Seriously Phil. Get some relevant and valid commentary.

    (How is the rabbit problem going Kev?)
    • Indeed...

      From my experience Kevin has from day 1 advocated Telstra as being the only option for Australia's comms and has argued along those lines.

      If we believe that so, then Kevin is to be believed IMO, otherwise???
  • I'm intrigued to hear about Kevin's rabbit problem.
    • Love to expand but it's something he prefers to keep hidden under his house. (Or so I'm led to believe.)
  • FTTH / FTTN - Hold on?
    Practically everyone I talk to and every home I go to connects to the Internet via - wait for it - Wireless and WiFi (802.11). They no longer connect via direct wire/fibre connections fixed to a particular desk/table/chair location. Tablets and smart phones have only accentuated this and many younger people I know NO LONGER PAY FOR A FIXED LINE CONNECTION at all - particularly if they are renting a flat or house and using their iPad / Galaxy tablet, etc.!

    So - FTTH - well - OK but everyone will connect wirelessly rather than dragging Cat 5 / 6 cables over the house from the NTU unit - wherever NBN will install it ( in the garage, on the wall outside, in the hall or ???). In actual fact most home users will be using FTTN - yes - but now the "Node" will be their house NBN connection and everyone in the street will be doing the same thing.

    FTTH was based on a consumer usage model that is rapidly passing - i.e. the fixed line connection. Mum and Dada and Son and Daughter are simply voting with their $ and buying the smart phone (highest uptake rate of any such technology ever according to a recent report). So - while FTTH makes sense in some cases, e.g. hospitals, schools, etc. for each and every private residence the REAL end-use connection will be wireless anyway!

    So - why not cut the costs - rather than having a street full of 802.11 WiFi, maladministered circuits just employ a local group wireless scheme. Easier management! Better security! Less cost! and in line with what the current user is actually using! I am doing that right now with this piece.

    Is it possible that the only device the average home will directly connect by "wire" to the NBN unit will be - good heavens - the old analog telephone?

    FTTN is the way that Obama and the USA are heading over a similar size, large country. We may have to follow anyway if the costs really do blow out as seems to be the possibility! You see - the real "take up" model is wrong in the era of mobile tech.
    • BS...!!!!!

      Check these figures and see...


      Add stupid excuse and but, but, but ......................... here!
      • Go get em Beta! ;) Love it when u prove them non believers wrong
      • Well played. It's going to be hard to argue with that.
        • Indeed, thanks guys.

          FFS, I (like I'm sure you) suffer fools...

          And the thing is, most of these newbies are probably the same old political FUDsters who we have already torn to shreds, but are compelled to continue their electioneering stupidity, under a new moniker...!
      • Ahh yes, idiot Beta with his favourite ABS statistics, which he mistakenly beieves proves that fixed line services are the most used and on the up and up.

        Lets think logically (I know you are not capable of that Beta, but humor me):

        100 people on mobile devices downloading 200Kb of data per hour.

        1 gameboy on his fixed line downloading 2Gb of data per hour.

        Which of the two is the most internet usage?

    • "Is it possible that the only device the average home will directly connect by "wire" to the NBN unit will be - good heavens - the old analog telephone?"

      Nope and your last four paragraphs prove you dont know what you are talking about.

      "FTTN is the way that Obama and the USA are heading over a similar size, large country."

      Hubert Cumberdale
    • Ooooo showing off your knowledge there! 802.11 This guy must know his stuff! His opinion must mean something!


      For starters wifi has a range of around 100 meters in the standard. In reality, it's more like 30. It also plugs into this thing called a cable that does all the hard work.
      It's like plonking a rabbit on a horse and claiming that your rabbit is more than adequate to pull your cart.

      Go ahead. Get your rabbit to pull your cart by itself. We'll see how well your 802.11 Rabbit does without the 802.3 Clydesdale.

      Wireless is wireless is wireless. It doesn't matter if it's your TV or your mobile phone, they all have the exact same issues.

      If you've ever had to grab the curly antenna from your TV, stand in the corner facing west with one leg in the air just to get something approximating a picture, then you have a very good understanding of the fundamentals of wireless.
    • Hate to break the news to you, but WiFi requires a wired connection backhaul to work.

      Given that less than 2% of internet traffic is currently carried wirelessly (obviously I don't count WiFi since it is in reality a wired connection simply replacing the blue LAN cable back to the WIRED modem) I must wonder about your claim.
    • "So - why not cut the costs - rather than having a street full of 802.11 WiFi, maladministered circuits just employ a local group wireless scheme"

      Because 90% of the signal is lost passing through the wall.
      If you put the transmitter inside the house, this is a good thing as it limits interference to your neighbours.
      It's a BAD thing if you put the transmitter in the street because you have to run 10 times the power, even if the transmitter is mounted on the wall of the house, to get the same coverage inside. If you only put a transmitter on every second house, you need to run 40 times the power because sigal drops of at the square of the distance. Try and cover 30 houses and you ae running about 1000 times the power.
      At this point everyone is interfering with everyone else so you have to run even higher power.

      The simple fact is that in accordance with Shannnons Law, a fundamental law of physics, increasinfg the number of bases is a process of diminishing returns.
      The only thing you can do to fix it is to increase the isolation by putting the base inside the dwelling as a WiFi router.

      Wireless cannot replace the NBN because the reality is, the only thing that can make ubiquitous wireless work IS the NBN.