NBN Co releases transitory corporate plan for 2015

The NBN Co corporate plan for 2014 until 2017 has been released, but the company says that due to uncertainty surrounding the project, it cannot forecast with a 'reasonable level of confidence' beyond the next 12 months.
Written by Chris Duckett, Contributor and  Leon Spencer, Contributor

NBN Co intends to triple the number of brownfields premises activated on the National Broadband Network (NBN) by the end of the 2015 financial year, the company has stated in its Corporate Plan 2014-17, released today.


Over the same time period, NBN Co says it will have passed 725,000 brownfield premises, with 650,000 of those premises ready for service and connected via fibre to the premises (FttP), as well as 165,000 greenfield passed in total.

However, the company does not estimate rollout numbers for the last two years that its corporate plan is meant to cover. NBN Co cites the ongoing negotiations with Telstra and Optus, trials on fibre-to-the-node (FttN) technology, and the need to update business processes and IT software to handle the so-called "multi-technology mix" (MTM) model for the NBN going forward as reasons for not estimating financial years 2016 and 2017.

"Given the above levels of uncertainty, the 2014-17 Corporate Plan, which covers the period 1 July 2014 to 30 June 2017, should be viewed as a transition plan for NBN Co," the plan said.

In line with previous statements made by CEO Bill Morrow in August, the company intends to have 1 million premises passed by June 30, 2015, with NBN Co now working towards April's new goal statement from Communications Minister Malcolm Turnbull of a minimum 25Mbps download speed and a "proportionate" upload speed to all premises, and aiming for 50Mbps to 90 percent of premises "as soon as possible".

Last week, NBN Co formally ended the plans to roll out fibre to the premises to 93 percent of Australian premises, mandating that fibre to the node should be the default technology choice.

"Where the NBN fibre-to-the-premises network has been deployed or is in advanced stages of being built, will remain part of the FttP rollout, and where the NBN fixed-wireless or satellite networks are earmarked for deployment, will remain part of the Fixed Wireless or Satellite rollout," NBN Co said last week.

Despite that pronouncement, and despite NBN Co expecting the first FttN customers to be activated over the next six months, the company said that it is looking at the "potential implementation" of a redesigned FttP model that will see less and smaller fibres used per premises, removal of passive optical network protection, making battery backup mandatory, using aerial extension methods, and using alternate fibre drop methods.

"Starting in FY2015 and on a continuing basis, NBN Co plans to continue to make changes to the construction delivery model, including continued simplification and standardisation of the deployment process with clear design rules, standardised specifications and processes, an industry-standard design environment, and a relevant construction methodology and operating manual for contractors on the ground," the plan said.

It is expected that the initial releases of hybrid fibre-coaxial (HFC) and fibre-to-the-basement products will be made by the end of June 2015.

"The launch timings will be dependent upon concluding negotiations with a number of third parties and executing a number of agreements," the plan said.

Turnbull, who delivered a keynote presentation at the NBN Rebooted event presented by the Communications Alliance and CommsDay in Sydney on Monday, said that the new corporate plan reflects the strategy to focus on the end users of the NBN infrastructure.

"We continue in the construction of the fibre-to-the-premises network, but on a more consistent and professional basis," said Turnbull. "And at the same time, proceed to change the deployment strategy in line with the findings of the strategic review.

"The biggest change [in strategy] has been the most obvious and in many ways the most basic. The Australian government, as the sole shareholder, has enabled the company to do what any successful business must do: Focus relentlessly on the needs of the customer," he said.

Turnbull reiterated NBN Co's assertion that the ongoing network negotiations with Telstra and Opus have hampered the ability for the company to publish firm rollout figures for 2016 and 2017.

"David Thodey once described the commercial deal with the NBN Co as the most complex ever signed in Australia's corporate history," he said. "The amendments to those definitive agreements with Telstra and their counterparts, with Optus, are equally complex. These agreements are certainly the most complex I've ever seen."

Despite Telstra working to renegotiate its AU$11 billion agreement with NBN Co over access to its copper lines for FttN delivery, Turnbull suggested that Thodey had not asked for more than what the company deserves under the deal.

"David Thodey has stuck to his 'not a penny more, not a penny less' commitment, and has not sought any incremental value for Telstra to transfer the copper and HFC networks to the NBN Co," he said. "While Telstra has sought to ensure that it is not worse off, or very materially amending the definitive agreements, this process has not in any way slowed the rollout."

Meanwhile, NBN Co's chief customer officer John Simon said that while the government's multi-technology mix has presented the company with a number of challenges, it also opens new opportunities.

"While the MTM model does bring about a lot of change, it also opens up a lot of options we didn't have before," he said at the event. "We have to rapidly expand our systems and also get access to skills we didn't have as we move from our FttP model to a mixed-technology model, which covers FttN, basement, distribution via the HFC."

Simon said that there has been a public misconception that speed is at the centre of the NBN Co's goal, and that the company is taking a technology-agnostic approach in its drive to connect Australians to the broadband network.

"The network debate — how you connect or what technology you use to connect — should be irrelevant," he said. "What should be relevant is that customers can get access to high-speed broadband."

Shadow Communications Minister Jason Clare slammed the corporate plan's restricted foresight.

"Malcolm Turnbull said it would take one year to transition NBN Co to roll out his second-rate NBN," Clare said. "It is now more than 14 months since he got the job, and all we've got is a second-rate plan to match his second-rate network.

"In a plan that should have a three-year horizon, the most Turnbull can manage is seven months."

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