NBN Co low-balls fibre rollout

Given Communications Minister Malcolm Turnbull's frequent criticism of NBN Co's failure to meet construction targets, it's not surprising that the company is easily on target to beat its new goal for June.

NBN Co has said that its construction will ramp up in the coming weeks, but the company is already on track to easily meet the communications minister's new construction target set just after the election.

Prior to the election, then-Shadow Communications Minister Malcolm Turnbull often criticised NBN Co for continually failing to reach its premises passed targets. He said he had no confidence in the company because "they've never been able to set a target they can keep".

One of the transparency measures that Turnbull introduced after the election was to have NBN Co begin to report its rollout stats weekly, rather than quarterly, or whenever there was a parliamentary hearing. This has meant that the statistics tend to be overanalysed week to week, with fluctuations in the number of premises passed in one particular week seized upon as proof that the NBN is doing better, or worse than expected, depending on your predisposed view.

But with more than six months' worth of weekly statistics and the historical data available, it is now possible to get a broader view of the NBN rollout and see that it is, in fact, ramping up. ZDNet's previous analysis already revealed that the rollout added more serviceable brownfields premises in the six months to December 31 than it added in the entire 2012-13 financial year: 80,291 additional premises against 78,931 in FY2012-13.

On the current set of statistics released this week, NBN Co will only need to pass 3,216 existing homes and businesses by fibre per week every week from January 26 until the end of June to meet the revised 357,000 premises passed target. This is something that NBN Co has been more than capable of meeting if the company keeps up the rollout.

Image: Chris Duckett/ZDNet

NBN Co's average run rate from July 2013 until last weekend sits at 4,157 premises per week, and NBN Co would only need to have an average run rate of 3,126 premises per week from now until the end of June to meet the 357,000 target. Even staying at the same 4,157 premises rate, NBN Co would reach 379,698 premises by the end of June.

NBN Co executive chairman Ziggy Switkowski told the NBN Senate committee in December that the 357,000 target is based on NBN Co's expectation of what the industry can achieve.

"We have made reasonable allowances based upon experience. Contrary to past practices, where NBN Co appears to have sprinted to some sort of virtual finish line at every half, we are going to run at a steady rate for the purposes of this forecast," he said.

"We hope that you have an opportunity in a few months to say that you were right and that we did better."

Based on ZDNet's forecast, should the company maintain existing connection levels, barring some great big new asbestos scandal or more issues with construction companies, the target will be met easily.

Turnbull's original target of 450,000 brownfields premises covered by the fibre network at the end of June, before the release of the strategic review, would require NBN Co to almost double the run rate to 7,353 premises passed each week.

For comparison, if the company ever hoped to meet NBN Co's 2013 corporate plan target of 855,935 premises, it would need to be passing 25,805 premises per week with the fibre network. For the 1.1 million in the 2012 plan, it would need to be passing 38,262 premises per week.

While those targets now seem impossible, it is not entirely impossible that NBN Co will significantly surpass its 357,000 target if the construction industry does indeed get back to work as planned.

Between July 2013 and Sunday, even with an election, a change of government, an asbestos scare, and a slow down over the Christmas period, NBN Co still managed to maintain a weekly run rate much higher than in the preceding 12 months (2,590 premises per week) and the 12 months before that (352 premises per week).

NBN Co has said that construction of the fibre network will start to pick up later this week, but in the last week alone, it passed 4,709 existing premises.

It would be easy to suggest that NBN Co was deliberately slowing the rollout ahead of the target in June, but the target appears less about impeding the rollout of fibre to the premises, and more about giving the company, and the new minister, something to easily crow about.

Through low-balling the target, NBN Co and Turnbull will be able to step out at the end of June and say they were able to accomplish what Labor never could: Meeting an NBN construction target.

It was a luxury that Labor was never afforded. Under constant attack from the Coalition for the apparent slowness of the rollout, optimistic targets were set that NBN Co could never meet. Now the Coalition is doing the opposite: Set low expectations, and people might be impressed.

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