Turnbull breaks NBN promise: Less than half to get 25Mbps in 2016

Turnbull breaks NBN promise: Less than half to get 25Mbps in 2016

Summary: NBN Co's strategic review reveals that the cost of the NBN is now expected to be AU$41 billion, and only 43 percent of premises will get 25Mbps download speeds by 2016.

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TOPICS: NBN
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NBN Co's strategic review has decided that a mixture of technologies, including fibre to the node (FttN) and use of existing hybrid fibre-coaxial (HFC), will help save an estimated AU$32 billion on the cost of the National Broadband Network (NBN) that was now predicted to cost AU$73 billion under Labor's plan.

The strategic review (PDF), released to the public by NBN Co and Communications Minister Malcolm Turnbull today, paints a dire picture of the state of the existing rollout. According to the review, the network would have cost AU$73 billion, and would not have been completed until mid-2024. This is in direct contrast to the final NBN Co corporate plan put together by the previous NBN board, which indicated that the network would be completed at the end of 2021, and would not cost more than the already estimated peak funding requirement of AU$44.1 billion.

"In a nutshell, you can see the project is in much worse shape than had been represented by the previous government," Turnbull said.

"You can see that what was happening before was as the rollout continued to disappoint, all that was happening was the trajectory was getting steeper so you could meet the date."

Under a new proposal, NBN Co will now look to deploy a "multi-technology model" combining around 24 percent of fibre to the premises (FttP), 41 percent on fibre to the node, and 28 percent on HFC, with the remaining to be served by fixed-wireless and satellite services, which will cost AU$41 billion, including AU$15 billion of investments already locked in.

NBN Co executive chairman Ziggy Switkowski said that the review showed that technology used in the NBN would not need to be upgraded for at least five years after construction.

"The NBN would not need to upgraded sooner than five years of construction of the first access technology," Switkowski told journalists.

"It is economically more efficient to upgrade over time rather than build a future-proof technology in a field where fast-changing technology is the norm."

In the government's first major broken promise on the NBN since the election, NBN Co has said that it will be unable to deliver 25Mbps to all Australians by the end of 2016, instead stating that approximately 43 percent of premises will have access to 25Mbps download speeds at the end of 2016, and 91 percent of premises will have access to 50Mbps by the end of 2019. The report estimates that between 60 and 75 percent of premises would have access to 100Mbps download speeds by 2019.

But NBN Co has said that the download speeds will no longer be guaranteed to end-user premises. In the press release accompanying the review, NBN Co said it would be designing a "new-look NBN" to provide the guaranteed speeds to NBN Co's wholesale customers, while end-user speeds will depend on factors outside of NBN Co's control, including end-user equipment quality, software, broadband plans, and the ISPs.

The review claims that under the current forecast, only 22 percent of premises would have had access to 25Mbps by 2016, and only 57 percent of premises would have had access to 50Mbps or 100Mbps by 2019.

Turnbull said that the broken promise was due to the Coalition not having access to the full detail of the state of the company prior to the election.

"Our policy was obviously written by us without access to what was actually happening in the NBN Co itself. It was a very good effort, given the circumstances we found ourselves. The situation is much worse in the company than we had thought," he said.

"We assumed they would meet their forecasts, and we also assumed the company would be able to start large-scale FttN deployment about a year earlier than this study."

Areas with worse broadband speeds in Australia could expect to see upgrades two years sooner than the current proposal, according to the report.

The report also censored the expected cost per premises passed for each of the different technologies, unlike the former government, which estimated that the cost per premises passed was AU$2,500. Turnbull said that the redactions were made at the request of NBN Co.

"The company requested a number of redactions; we requested none. There are fewer redactions than [NBN Co] would have liked. We persuaded them to live with less. This is a business, it has a lot of negotiations ahead of it, so there has to be caution there," he said.

Switkowski said that "no normal business" would have disclosed the cost per premises passed.

"The cost per premises multiplied by 10 or 12 million premises are billion-dollar variations, and have ramifications for the whole supply chain and our relationship with partners, which we are trying to repair and negotiate [with]," he said.

"I think the transparency should be evident in the documents you have access to. No normal business would disclose this kind of information. We've struck what we think is a reasonable balance."

The document estimates operating expenses for between AU$35 and AU$55 for each FttN premises per year, including between AU$10 and AU$20 for electricity and between AU$25 and AU$35 for remediation of the copper line. Turnbull said that the assumptions on copper remediation are "very conservative".

"It is quite clear from the document that the assumptions are very conservative. A lot of people were saying the Coalition have not given any thought to the remediation of the copper. We did, but this team have. They have approached it in a much more conservative way than BT's experience," he said.

NBN Co is expected to take a one-off hit of between AU$110 million and AU$180 million to fix the OSS/BSS systems to be compatible for fibre to the node, and a one-off hit of AU$70 million and AU$110 million to allow the OSS/BSS systems to be compatible with the HFC networks.

The report assumes that NBN Co will gain access to Optus' and Telstra's HFC in the second half of 2015, and will be worked on over the next four years. It also assumed that there will be a small fibre-to-the-node trial in the second half of 2015, with a full rollout by 2018.

The timing suggests that the premises that will have access to 25Mbps download speeds by 2016 will either be the existing houses covered by fibre to the premises and fixed wireless, or those covered by the HFC network.

Switkowski said he doesn't think that in the short term, there will be any redundancies in NBN Co, but he said that NBN Co would look to ensure that it has the right skill set for its workforce.

"I, for one, do not anticipate that there won't be any near-term action around headcount," he said.

"My head is not around attempting to rationalise the employment levels within NBN Co. That is not a major issue, even though I acknowledge the headcount is [higher]."

Switkowski said the company would focus on improving the culture in NBN Co.

Following the delivery of the report, NBN Co will now work on a new statement of expectations and a new corporate plan to be approved before July 1, 2014. NBN Co will establish a transformation office, work to improve the existing fibre-to-the-premises delivery model, prepare for the new multi-technology approach, and assess the IT changes required and the personnel requirement. NBN Co will also be preparing for new commercial negotiations, which will commence once the new statement of expectations is issued.

Topic: NBN

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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63 comments
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  • Turnbulls spin is breathtaking. His apologists too embarrassed and nowhere to be seen. Lies designed to fool voters before the election become even more apparent. $94 billion for the real NBN becomes $73 billion yet still higher to make their own price tag seem less outrageous. 25mbit download speed for "every household and business" in Australia becomes 25mbit download speed for "approximately 43 percent of households and businesses" in Australia. Weasel mode on; blame the other mob.

    Meanwhile GimpCo price tag blows out to $41 billion basically making even less value for money. Zoggy admits it will need upgrading 5 years after completion making it a waste of time and finishes with a illogical and nonsensical statement about being "economically more efficient".

    Coalition clowns succeed with their plan to make broadband in Australia a bigger joke; a patchwork quilt of obsolete technologies all for the sake of having a "multi-technology model". Apparent HFC acquisition is on the cards too because that lemon we buy just can't be sour enough... Stop the waste. 1114 days to go, I expect to be in the 43 percent.
    Hubert Cumberdale
    • This is a Labor Party Disaster

      No wonder Labor and Stephen Conroy refused to release the full details of the NBN disaster before the election. Now we know how bad it really is. The NBN should be scrapped immediately. Governments are always wasteful and inefficient. Get rid of this mess now.
      peterp772000
      • you really...

        ...need to get a grip. Posting your 'opinion' here has one result. Further confirmation of your ignorance, pointless political bias or possible mental disability...

        Whatever the cause, do yourself a favour and annoy the Murdoch media who have lots of silly trolls and drones, and leave sensible outlets to the grown ups...
        btone-c5d11
      • So what do you propose?

        Dissolving NBN or privatizing it?
        John L. Ries
        • Dissolve it. We don't need it.

          It's turning out to be a colossal waste of money. This is what happens when you don't do a cost-benefit analysis as Labor and Rudd refused to do.

          And 24Mb/sec is more than fast enough. Furthermore, broadband and wireless technologies are continuously evolving.
          peterp772000
          • "And 24Mb/sec is more than fast enough."

            Speak for yourself, redneck...
            Tinman_au
      • Get off this website peter. I'm only interested in discourse with rational thinkers.
        Hubert Cumberdale
        • Stop acting like a bully

          Hey Hubert, I'm rational enough to understand that spending $76 billion for the NBN would mean financial catastrophe for Australia. It's a shame that big government socialists like you fail to grasp that simple fact. And this is not your website so I will post as I wish
          peterp772000
      • Mission Accomplished

        OK Tony, Malcolm has done a superb job in achieving your target...NBN Demolished & Rupert to be repaid.
        grump-a1eeb
      • Seriously Peter

        Have you done any real research on this or you enjoying MT's cool aid that much?
        Ramrunner-5dd3e
    • Settle down and check your facts.

      Turnbull made it quite clear when they stated the policy in April that they did not have the information they needed to model from, and as it turns out all they got was labor spin, now they have access to the data it turns out it was all crap.
      Duncan!
      • Come On Now...

        Of course it is par for the course for governments to downplay problems and make pie in the sky promises. I think it is pretty naive to think otherwise. But, come on, you have to be drinking a lot of Kool Aid to think that Turnbull's promises were ever reasonable, or were fully based upon Labor spin. I'm also pretty darn sure that the truth about the ultimate cost and timeframe of the Labor plan actually falls somewhere in between what was reported under Labor and what is now being reported under the current Coalition. (Note my subtle reference to another form of spin: "Coalitions are bad", says the Coalition...at least until they are elected into power. One of the keys to being politically saavy is to know that everyone piles it on.)
        hmmm,
      • Perhaps you are the one that needs to "check your facts" duncan. Fact is the coalitions own claim was '25mbps for all by 2016'. Other parties are in no position to take responsibility for their poorly thought out promises. The real NBN does not promise this. The real NBN is based on FtttP not FttN. That is a coalition promise. 71% FttN is clearly there in black and blue on page 7 in their own "The Coalition's Plan for Fast Broadband and an Affordable NBN.pdf" document (don't bother responding unless you acknowledge this) a document they took to the election and a document we voted them in for. That number is now 43%. A good 27% difference. So we were either getting spin and lies from the coalition in April or we are getting spin and lies from the coalition now. Take your pick.

        Also you should know that the rational ones among us warned of this and were saying LONG ago that the coalition plan would take just as long to roll out only to be shouted down by copper fanboys who thought they knew better. "FttN is quicker to roll out, we need our broadband improved sooner and FttP is taking too long etc etc etc". But "fast" "affordable" and "sooner" no longer applies to the coalition plan... oh wait it never really did. 1113 days to go.
        Hubert Cumberdale
        • 43% should be 41%. It's actually worse, a 30% difference.
          Hubert Cumberdale
        • Check the facts Hubert!

          Lets see now....under Labor:
          Expenditures would have blown out from $44.1 billion to $73 billion
          Revenues were over-estimated up to 2021 by $13 billion
          The NBN would have missed it's 2021 deadline by three years

          No wonder Turnbull needs to break his promise These number are staggering.

          Conroy, Rudd, Gillard and Albanese need to be called before an inquiry and explain why they lied about this. If this happened in the private sector, they would be facing criminal charges now.

          Labor's incompetence and ineptitude would have financially crippled us with this useless project.
          peterp772000
  • Oh. My. God

    So, rewind to September 13, a day before the Government changed, and Turnbull was pushing that 100% of Australians WILL have 25 Mbps by 2016, and that 90% of those with a fixed line connection WILL have 50 Mbps by 2019. Flat promises made, to counter the Labor proposition we've all read about for so many years.

    Despite protests and claims that such a rollout was impossible to deliver, either by the timeframe promised (ie by 2016, let alone tweaking it more by 2019) or the cost claimed ($29.4b), the promises were made. No available detail, no chance to see how they would achieve such goals, only that they WOULD.

    Ever since that fateful day in September, its been one excuse after another. Hide the rollout maps so people cant see where they're at, put seriously biased yes-men into the key positions, and strip away everything Labor related within NBN Co. No discussions whatsoever with outgoing management, of any level, only a scorched earth policy and start again.

    And the end result is this.

    Well, to all of Turnbulls yes-men, good luck. You're going to get what you asked for - a half arsed rollout that in the end will take longer, and be more expensive that what its replacing. Congratulations, you've got what you deserved.

    Ask yourself this. If only half are going to get 25 MBps by 2016, how much longer is it going to take for the 90% to get 50 Mbps?

    I wait with eager excitement for the bullshit excuses to be offered in defense of this.
    Gav70
    • AND...

      Let's not mention we actually get NO GUARANTEE of 25Mbps now either.

      22% at 25Mbps is now the best we can hope for if the above article is true. By 2016.

      This is a complete and utter waste of time. How is this ANY better than the crap we have now?

      Oh, because it's now $41b and MT gets his way. I get it.
      Ramrunner-5dd3e
      • SHOCKING!

        Like you say:

        NO GUARANTEE of 25Mbps now either.
        22% at 25Mbps is now the best we can hope for by 2016.

        Current 100 year old copper gives "up to" 24 Mbps now
        28% of NBN will be via the HFC (so 6% of these guys won't even get 25Mbps!)

        Seriously, Turnbull needs to be moved on and we need someone who will listen to experts
        ioswoody
  • "$4.7 billion and not a cent more"

    Said Steve Conroy. And ever since, the whole idea of an NBN has been a mess caused by his incompetence.
    1,2,3
    • LOL

      Really? The story shows that Turnbull is only going to deliver on 43% of the rollout, at a cost increase of 40%, and thats what you get out of the story?

      Try harder.
      Gav70