NBN Co rejects Coalition's NBN pricing

NBN Co CEO Mike Quigley has said he is confident that the National Broadband Network project can be delivered on time and on budget.
Written by Josh Taylor, Contributor

NBN Co CEO Mike Quigley has rejected a Coalition analysis that claims the current National Broadband Network (NBN) project will be delayed by five years and will cost up to AU$94 billion.

Last week, when the Coalition released its own fibre-to-the-node alternative NBN policy, Shadow Communications Minister Malcolm Turnbull said that the Coalition analysis of the current project estimated that in a certain scenario, the cost of the network could blow out to AU$94 billion and be delayed by five years.

Quigley today rejected that possibility, telling the joint parliamentary committee overseeing the NBN that he was confident that the project could be delivered on time by June 2021, and on budget with a capital expenditure of AU$37.4 billion.

"Personally, I'm more than happy with the progress NBN Co has made. It's in my view, reasonably satisfying that we've advanced to this point [...] given the changes we had to take on board, given the increase in scope," he said.

"We are confident that we can bring in the project in on time at that end date, and on budget."

Quigley said that in taking into account the delays in construction now, the company was not seeking to increase the peak rate of premises it will pass, but will instead just maintain that peak over a longer period of the construction in order to make up the loss.

NBN Co today provided the committee with a detailed breakdown of its costs (PDF), as well as the current uptake and data usage on the network.

The Coalition had estimated that the cost to pass each premises by fibre would be AU$3,400, but Quigley said today that the current cost per existing premises was now between AU$2,200 and AU$2,500. He said the cost had declined thanks to the shift to the build drop approach that pulls the fibre right up to the side of every premises without first seeking permission from the owner of that premises.

It was even cheaper for new housing premises, at AU$700 per premises.

As of the end of March, Quigley confirmed that 39 percent of users on the NBN were on the 12 megabits-per-second (Mbps)/1Mbps plan, 31 percent of users were on the 100Mbps/40Mbps plan, 24 percent were on the 25Mbps/5Mbps plan, 5 percent were on the 50Mbps/20Mbps plan, and 1 percent were on the 25Mbps/10Mbps plan.

The average download per month on the NBN was now sitting at 47GB per month, compared to the Australian average of 31GB per month.

The release of the new documents breaking down the cost of the project just before the committee convened was criticised by Turnbull on Friday, stating that they should have been provided earlier than the hearing.

Quigley said that the documents were only released when NBN Co could be confident of the details provided.

"Whenever we put numbers forward, we want to make sure we have some confidence in them," he said.

NBN Co is preparing a new corporate plan, which is planned to be submitted to government in May. Committee chair and regional Independent MP Rob Oakeshott has flagged that he would like NBN Co to create an alternative corporate plan that assesses the Coalition's alternative NBN.

Quigley has said that it would be possible for the company to undertake such a task, but he said the big question would remain over the quality of Telstra's copper network, which NBN Co had no information on.

"It very much depends on the quality of the copper in the ground. You really have to test it to work out how much remediation you have to do," he said.

"While inside the company we know a lot about VDSL technology including vectoring, what we don't know obviously what is the state of the copper network in Australia."

He said that it would need to be determined how much remediation would need to be done, and the cost of that remediation, and also who would pay for it.

NBN Co chief technology officer Gary McLaren confirmed that the company had also been assessing going fibre to the basement in multi-dwelling units, with a VDSL connection to premises from there. The company had no plans to switch to this policy at this stage, however, because it is not the government's policy but Quigley said that NBN Co does take policy alternatives to the government to assess if they are determined to be more cost effective. He said one big issue for fibre to the basement would be the supply of voice services into those apartments.

The hearing is scheduled to run until 3pm AEST today.

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