NBN Co tips increased costs, 6-month delay

NBN Co has today released its revised corporate plan, outlining new roll-out targets and expected costs and revenues for Australia's NBN.
Written by Josh Taylor, Contributor

NBN Co has today released its new corporate plan, showing that the capital cost for the National Broadband Network (NBN) has increased to AU$37.4 billion, and that the network will be completed six months later than scheduled, in June 2021.

The new "Operational Plan", released by NBN Co CEO Mike Quigley and Communications Minister Stephen Conroy in Sydney today, sets new targets and lays out the expected costs for the NBN's roll-out across Australia.

The original corporate plan released in 2010 has been disregarded by the company, because the roll-out of the network was delayed due to delays in signing an AU$11 billion agreement with Telstra to decommission the copper network and lease ducts and pits to NBN Co for the roll-out.

The new corporate plan indicates that due to an agreement with Optus to shut down its hybrid-fibre coaxial (HFC) networks, an increase from 14 to 121 points of interconnect and expected upgrades to the satellite and fixed-wireless network, the cost of the network has gone up from AU$35.9 billion to AU$37.4 billion.

Operating expenditure has also gone up, from AU$23.2 billion to AU$26.4 billion, and revenue has decreased slightly to 2021, from AU$23.7 billion to AU$23.1 billion, but NBN Co is predicting a slight increase in the rate of return to 7.1 per cent from 7 per cent.

NBN Co is expected to begin construction to pass a total of 758,000 premises across Australia by the end of this year, but the overall roll-out of the network has been delayed by six months, to June 2021.

The company is also expecting to accelerate the capital expenditure of the network, because instead of waiting for the owners of premises to indicate that they want the NBN before the fibre is rolled out to their premises, NBN Co will now roll it up to the door in the course of the roll-out. Quigley denied that this is implementing an "opt-out" policy for the NBN, but admitted that people could only stop the fibre from being rolled to their premises by requesting it.

This method is expected to be more cost effective.

There is expected to be a reduction in expected equipment costs, thanks to architectural optimisation, volume/price arrangements and in rolling out the fixed-wireless and satellite services, but there will be an increase in construction labour costs, as well as additional costs for multi-dwelling units and IT systems.

The battery backups for the network-terminating devices will now be optional for all residents, and customers will be able to decline to have one installed if they wish. The government came to this decision after consulting with industry and emergency services, and, as a result, NBN Co predicts that just 50 per cent of residents will take the backup batteries. Quigley estimated that this will save the company hundreds of millions of dollars.

More details to come.

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