Tasmanian council seeks refund on 'underwhelming and exorbitant' NBN FttP estimate

Meander Valley Council is looking to get back the AU$11,000 NBN charged to provide a cost estimate to upgrade two areas to fibre-to-the-premises technology.
Written by Chris Duckett, Contributor

The company responsible for rolling out the National Broadband Network (NBN) across Australia has been accused of providing a substandard cost estimate for Meander Valley Council's request to upgrade two areas from NBN's preferred fibre-to-the-node (FttN) rollout technology to fibre-to-the-premises (FttP).

"Council will write to NBN Co and demand a refund of the application fee, because the level of detail in the response received was not of a standard commensurate with the application fee," Councillor Andrew Connor wrote in a motion that was passed on Tuesday.

The full cost for the two area switch estimates, covering Westbury and Hagley, and Hadspen and Traveller's Rest in northern Tasmania, was AU$6,000 and AU$4,000, respectively, with GST added on top.

"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," said Connor.

"A further request to NBN Co for more information about this estimate did not provide any solid justification as to why the application fee of AU$10,000 resulted in an estimate lacking in any detail to help councillors or the community determine the value of proceeding in this matter."

To upgrade Westbury and Hagley, NBN estimated a range of AU$2.75 million to AU$3.3 million, while for Hadspen and Traveller's Rest, the estimate was AU$2.2 million to AU$2.75 million.

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.

"Hardly worth AU$10,000.

"Since making the application, it has been reported that there are cost blowouts in the copper-based NBN rollout, meaning the actual difference between copper and fibre systems will be a smaller figure than as estimated by NBN Co in 2015."

In a letter to the council, NBN said it conducted the estimates using its "internal technology selection model".

"The model's results are then assessed by our engineering team for inaccuracies and inclusion of additional environmental factors if required. A final incremental cost is then calculated by subtracting the estimated original deployment costs from the proposed technology costs," the company said.

"This cost estimation is a desktop investigation, which takes a number of factors into account when calculating the difference between the rollout of FttN and FttP in an area.

"Should council proceed with a design and quote, a final build price would then be calculated, which we can then enter into contract. It is our objective that the final build price would land within our estimated range."

NBN told ZDNet today that it charges a standard application fee to ensure applications are genuine.

"These fees are detailed on the NBN website and agreed before a quote is undertaken, and are not refundable," a spokesperson for NBN said.

"The fee structure also helps applicants get a likely cost estimate without having to commit to a large design fee."

NBN said it offered a briefing to Meander Valley Council, and that offer remained open.

Under its Technology Choice program, councils are able to upgrade an area to FttP with an Area Switch, while individuals have to use the Individual Switch product. However, an application fee must be paid before NBN will look into a request.

"The cost to change technology infrastructure for Area Switch could range from tens of thousands of dollars to few millions of dollars, and for Individual Premises Switch from few hundred dollars to tens of thousands of dollars where the cost is generally dependent upon size and complexity of the project," NBN Co said in documentation when it launched the products in March 2015.

In a response to Senate Estimates Questions on Notice posted earlier this week, NBN said six councils had applied for an area switch, but no council had yet chosen to move to a full build quote.

Along with Meander Valley Council, Rockhampton Regional Council and Burnie City Council had received cost estimates, while Goulburn Mulwaree Council, Greater Shepparton City Council, and Flinders Council had applied.

"No quotes have been provided to councils. The above councils have been provided with cost estimate ranges that are developed through a desktop analysis so that the councils can decide whether they want a formal quote, as per the application process," NBN said in its response.

Last week, NBN refused to reveal to senators how much FttN or FttDP will be rolled out in Australia, citing commercial in confidence.

"Forecasts of this nature are included in the Corporate Plan 2016 fibre-to-the-node numbers," the company said. "To disaggregate these would reveal NBN's strategic business direction to potential infrastructure competitors, and are therefore commercial in confidence."

In its corporate plan released in August, NBN said it would deploy either fibre to the node (FttN) or fibre to the basement (FttB) to 38 percent of the Australian population, with fibre to the premises to be used for 20 percent, and 34 percent to receive NBN services via hybrid fibre-coaxial.

A similar commercial-in-confidence mantra was stated to Meander Valley Council by NBN, which said it tries to give applicants a "true incremental cost".

"We believe this ensures we get the best outcome for the applicant. However, this does open up our costings for investigation by parties outside of our program, and can be taken out of context," it said.

"To ensure validity of the Technology Choice Program, as well as protect the Commercial Interests of our Service Development Partners, we request that the cost estimation remains confidential between the applicant and nbn co [sic]."

Councillor Connor said in his Tuesday motion that the cost of an FttP upgrade would enter the public domain through council budget papers, in any case.

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