Study reveals 15-year NBN payback

Communications Minister Stephen Conroy has just released the controversial National Broadband Network Implementation study to the public after several months of holding the document behind closed doors.
Written by Renai LeMay, Contributor and  Suzanne Tindal, Contributor

Communications Minister Stephen Conroy has just released the controversial National Broadband Network implementation study to the public after several months of holding the document behind closed doors.

"After months of detailed and rigorous analysis, the implementation study confirms that the government's National Broadband Network is achievable, viable and will transform life and business in Australia," Communications Minister Stephen Conroy said in a statement.

"The implementation study also confirms that while infrastructure sharing and other commercial arrangements with existing telecommunications companies can benefit from the project, the NBN will be financially viable even without the participation of Telstra."

The release noted key findings of the report, one of which was that $43 billion was a conservative estimate for how much the network could cost to build. The peak investment required by the government was considered to be $26 billion by the end of the seventh year of the roll-out, with $18.3 billion to be found over the next four years, which the government will make "appropriate provision" in the 2010/2011 budget.

Another finding listed in the release was that the roll-out should reach 93 per cent of the population, instead of 90 per cent, and cover the 1.3 million new premises expected to be built by 2017/2018. Additionally, the study estimated that the network will be making profits by the sixth year of its build, and will be able to pay "significant" distributions equity when the roll-out is over. The government is expecting to receive a return on equity investment sufficient to fully cover the cost of its funds.

"The study confirms that the NBN business model establishes that taxpayers are paid back their investment with a modest return by year 15 of the project on the basis that privatisation is completed," Conroy said.

Entry-level broadband prices were suggested to be set at $20-$30 per month of a basic broadband service of 20Mbps, $30-$35 per month for broadband and voice, and around $50 per month for a higher speed broadband service, according to the study's release statement. It also stated that fibre-to-the-premise was the "optimal future-proof technology", with wireless only considered to hold a complementary role in providing broadband.

The Canberra press gallery has had the document since midday, as Conroy's office held a budget-style lock-up lasting from 12pm to 1:30pm and run by McKinsey partner Angus Dawson, the lead advisor on the report.

The minister has been promising to release the report for six weeks, but only this week confirmed that the report's release was imminent.

According to its original brief, the implementation study — which runs to 500 pages — will determine the operating arrangements for the NBN Company, as well as detailing network design and financial details — for example, attracting private sector investment. It was put together by consulting firms KPMG and McKinsey.

However, since NBN Co chief executive Mike Quigley came on board last year, the company has already taken action on a number of fronts, which the tender documents mentioned will be covered by the implementation study — such as key decisions on network design. The NBN Co has also kick-started various procurement processes associated with the NBN build-out.

Greens Senator Scott Ludlam had threatened to pull the party's support for the Federal Government's controversial telecommunications reform legislation due to Stephen Conroy's decision to not yet release the National Broadband Implementation study during the last Senate sitting.

For more details wait for further coverage on what is contained in the implementation study.

Editorial standards