NBN confirms no one has purchased an area switch

While few individuals are choosing to upgrade their NBN connection to full fibre, even fewer councils and corporate bodies are going with an upgrade from NBN.
Written by Chris Duckett, Contributor

The company responsible for rolling out the National Broadband Network (NBN) across Australia has revealed that so far, it has not proceeded with a single area switch under its technology choice program.

Responding to Senate Estimates Questions on Notice, NBN said it had so far received 28 area switch applications, provided two quotes in return, and had not begun construction in any area.

Launched in March last year, an area switch allows councils and corporate bodies to upgrade towns or multi-dwelling units to a superior technology offered by NBN -- such as from satellite to fixed wireless or FttX; from fixed wireless to FttX; or from fibre to the node or basement (FttN/B) to fibre to the premises (FttP) -- but an application fee must be paid before NBN will look into a request.

NBN said that to date, it has received revenue of AU$31,300 without GST from application fees, and AU$22,640 without GST from design and quote fees.

In February this year, Meander Valley Council said it would demand a refund on the AU$11,000 fee it paid for an estimate on the cost it would take for two areas to be upgraded to FttP technology.

At the time, Councillor Andrew Connor said the estimates were exorbitant, and the costs were well above what either the council or the community were able to fund.

"The estimate figures arrived at are no more detailed than simply multiplying the stated difference between technology options by the number of premises in each area," he said.

"There was no explanation of how the estimate figures were arrived at, and it appears there was no on-the-ground consideration given to the situation in each area, such as an inspection of assets or consultation with council."

For the FttP upgrade option available to individual premises, which NBN said earlier this week had only delivered three upgrades, the company on Wednesday said it had received 496 applications and provided five quotes, three of which proceeded to construction.

From those three premises, NBN had been able to book AU$38,724 in revenue, and had also gained AU$7,200 before GST from application fees and AU$1,500 before GST from design and quote fees.

In other answers to Questions on Notice, NBN said it spent close to AU$1.5 billion thus far on IT capital expenditure by the end of last year.

"Total IT capex spend to date, up to the end of December 2015, was AU$1,459 million," NBN said in response to a Question on Notice.

NBN, though, would not be drawn on forecasting its IT costs, citing well-worn reasoning.

"Due to ongoing commercial negotiations with IT vendors the forecast for IT capex by 2022 is commercial in confidence," it said.

In its half-yearly results announced in February, NBN said total capex spend to date was AU$11.1 billion, giving IT spend a 13.6 percent share of overall capex spend.

Under the NBN strategic review released in December 2013, the company was slated to spend AU$1.6 billion on IT capital expenditure.

At the time, the review said NBN would have to spend between AU$110 million and AU$180 million to allow its IT systems to work with its FttN products, and take a one-off hit of AU$70 million to AU$110 million to allow its systems to be compatible with the HFC networks.

Editorial standards