Labor releases new NBN corporate plan


news The Federal Government today released the National Broadband Network Company’s latest corporate plan covering the years from 2012 through 2015, stating that it showed the project was on track financially and in its rollout of broadband infrastructure around the nation.

The full document — available online in PDF form — sets out the key objectives and priorities for NBN Co for the three years from 1 July, 2012 to 30 June 2015, and represents a significant update from the company’s previous corporate plan, released in late 2010. The plan reports on NBN Co’s current status; regulatory issues and policy decision which impact the rollout and operation of the network; deployment forecasts for the period, specific assumptions that have been made about the rollout; market and product developments; and financial performance indicators and funding requirements.

In a statement issued by Communications Minister Stephen Conroy and Finance Minister Penny Wong this afternoon, the Government said the plan confirmed that the NBN was “a sound investment” which would pay its own way and generate a return to the Government of about 7 percent; and that the project was “on track” to meet its target of having work for 758,000 fibre premises commenced or completed by the end of 2012. The document also confirmed, the pair said, that wholesale broadband prices were projected to fall over time in both real and nominal terms under the NBN.

The Government did admit that the document showed some negatives with relation to the project; for example, the fact that the project capital cost of the NBN build had increased by 3.9 percent overall, and that the construction time for the NBN had been extended by six months.

However, this was offset by the fact that the total capital cost for the NBN was “significantly less” than the $43 billion originally announced by the Government in April 2009, the two ministers said, and the delay was less than the nine-month delay expected to have been caused by the lengthy negotiations around the $11 billion deal NBN Co has signed with Telstra to transfer its customers onto the NBN infrastructure and gain access to Telstra’s infrastructure.

“The Gillard Government is delivering on our commitment to provide all Australians with fast, reliable and affordable broadband,” said Conroy. “The assumptions and estimates in the 2010 business case have been reinforced or replaced with signed supply contracts, firm agreements, operational experience, and regulatory certainty. It is the forecasts in this plan against which the progress of the NBN should be measured.”

The pair pointed out that the NBN project had hit a number of key targets over the past few years, such as finalising the Telstra deal and a similar one with Optus and executing construction contracts for every state and territory in Australia and across all of the network technologies planned to be used in the NBN. In addition, they highlighted the impact of other factors on the NBN plan, such as changes to government policies around greenfields deployments and NBN battery backups and the competition regulator’s controversial decision on the number of points at which retail broadband providers will be able to connect to the network.

“These developments give greater certainty to NBN Co in delivering the Government’s commitment to provide all Australians with fast and reliable broadband,” said Wong. “For example, now that the deal with Optus has been finalised and approved by the ACCC, NBN Co can factor it in. As Optus customers are migrated to the NBN, this will result in increased revenue to NBN Co, as well as higher operating expenses.”

“The Gillard Government considers high speed broadband to be an essential utility for the 21st century, like water and electricity. This operational Corporate plan is the foundation on which this vision will be achieved,” Conroy said. “For Australia to fully embrace the digital age across our entire economy – in healthcare, in education, in small business, and in agriculture – all Australians need access to fast, reliable and affordable broadband.”

In a separate statement, NBN Co chief executive Mike Quigley highlighted the fact that the company’s projected rate of return from the network build had slightly increased to 7.1 percent.

“The Internal Rate of Return is essentially unchanged from our original projections and the company remains committed to the objective of connecting all Australians to high-speed broadband over the remaining nine years of this ten-year project,” said Quigley. “Moreover the new Corporate Plan reaffirms our commitment to ensure wholesale broadband prices fall over time.”

“The 2012-15 Corporate Plan reflects NBN Co’s transition to becoming an operational wholesale telecommunications company undertaking the volume rollout of high-speed broadband to every Australian premises,” the company said.

At 30 June 2012 construction had commenced or was complete for approximately 305,000 premises across Australia, with activity in every state and territory, according to the plan. By the end of December 2012, that number is forecast to rise to approximately 758,000 premises, in line with NBN Co’s 12-month rollout announcement in February. By mid-2015, construction will have commenced or be completed for approximately 3.5 million premises, in line with the 3-year rollout plan announced in March.

NBN Co’s corporate plan is a substantial document with a great deal of new information about the project. Delimiter will provide separate and informed analysis of the document over the next several days, following the release of commentary on it by the various sides of politics and the media. I want to let the dust settle on this before attempting to provide an objective judgement on what it means for the NBN project.

In the meantime, I’d welcome reader discussion of what the document shows about the NBN project. Are there aspects of the new NBN corporate plan which surprised you? Aspects which are different from the popular commentary around the NBN? Or aspects of the NBN which are performing exactly as expected? Post your thoughts below this article.


  1. “this will result in increased revenue to NBN Co, as well as higher operating expenses.” – surely lower operating expenses?

    • Serving more customers (increased revenue) costs more (higher operating expenses). Don’t forget that the Fixed Wireless & Satellite networks are cross-subsidised by the fibre, and if considered by themselves would make a loss.

    • Higher operating expenses due to more customers connected.

      Directly balanced out by increased revenue generated by those extra customers.

      • @Geoff U

        No, that would only be applicable if there was a 100% takeup of those extra potential customers NBNCo. gained (Optus deal) as soon as they are transferred. There won’t be. It will be up to 18 months in each area, which lags the revenue projections.

        • @Seven_tech

          Yes, in the middle of the rollout, that is correct.

          I should have mentioned that I was speaking in broad overall terms, referring to after the 18-month transition in each area and once all Optus customers have been migrated off copper onto fibre.

          So, as a revision:

          Once all Optus customers are using fibre and not copper, then there will be:

          Higher operating expenses due to more (Optus) customers connected.

          (and that extra OpEx will be)

          Directly balanced out by increased revenue generated by those extra (Optus) customers.

          • @Geoff U

            True. However, I don’t think you can count the additional OPEX towards the end of the rollout as directly related to the Optus migration. It is ONE of the things it relates to.

            There are many complex changes that have happened since the last plan and I think Greenfields deployment requirements would be the MOST OPEX increasing. Seeing as NBNCo. have to run temporary FAN’s while the Transit network isn’t built. AND the fact that they have to keep those FSAM’s active and maintained for Greenfields, which might have capacity for 3200 people….but only be serving 500, because the developments aren’t complete.

            Add to that USO and Payphones, 000 etc and that shows where the rest of the OPES goes. I don’t think there’s a big discrepancy here, personally.

      • Reasonable coverage

        “With the Optus deal we will be bringing some 500,000 customers onto the network that we were not anticipating in our original 2010 plan. Those are the customers who we were expecting to remain on the Optus hybrid fibre coaxial network. Now they will be coming across to the NBN so the capital expenditure costs for connections have gone up and the operational costs for migrations of those customers have gone up… And also we have an increase in revenue because those customers are coming onto the network.”

      • Geoff U what utter nonsense. As Terry McCann points out:

        As at June 30, it had 14,000 (customers), and only 4000 of those were actually connected by the fibre…. Those customers generated just $2 million of revenue over the entirety of the 2011-12 year.

        And to get the $2 million, ‘operating’ the NBN cost $521 million. Over and above, the quite separate build cost…

        • Your post is irrelevant.

          Your response this morning is responding to my post from yesterday afternoon which was made clearly obsolete after I revised my post yesterday evening (see above):

          Once all Optus customers are using fibre and not copper, then there will be:

          Higher operating expenses due to more (Optus) customers connected.

          (and that extra OpEx will be)

          Directly balanced out by increased revenue generated by those extra (Optus) customers.

          In other words – after all is done and dusted, not early on…

  2. I find it annoying that the plan lumps together the Fixed Wireless with the Satellite – all the numbers in the document treat them as if they’re one and the same, with no breakdown at all.

    The plan states that by FY2016 they’ll have 907,000 premises covered by Fixed Wireless & Satellite, but only 145,000 connected. That seems like a shockingly low take-up rate, especially given that a presumably large number of those premises currently have no access to broadband. How many of those premises currently have access to ADSL(2+)?

    • Many take up rates in the plan (this and the 2010 one) are deliberately conservative. That way, the project can be shown to meet minimum targets even with modest levels of customer interest.

      Which also means even more interest = wildly more successful NBN.

    • @Ian

      Agreed. They should separate them. However, I think you’ll find the takeup is so low, because:

      1- The satellite will cover 450 000, but they’re only expecting around 150 000 IIRC

      2- Wireless will cover 500 000, but many will already have equivalent (or close) ADSL. Also, these people have loved with (predominantly) worse broadband for longer, so have adjusted. Hence the takeup rate on only slightly better broadband is likely to be low. Compared with fibre, where you can have, in some cases, 1000% better internet, for roughly the same cost.

      • I don’t know if it’s wise to take the Age reporting at face value Abel…they have shown a a remarkable elasticity with the truth in the past.

        • Agreed, however they have reported Answers which are most relevant and actually informative, as well as the usual negative headline and a curates egg of an item

    • Maybe we should count how many policies he’s created per day since his birth?

      That sounds entirely fair!


      • How about since last election. That would be 0 policies a day since all they seem to produce are catch phrases.

  3. hmmm P47 of the plan seems to give a clear forward timeline in active and passive involvements:

    under Active Network Release 3 (ANR3) – Late 2012 – Multicast deployment as well as ‘voice enhancements’ (?) providing ‘operational capability enhancements’. multicast is self explanatory, but i dont know if the ‘enhancements’ includes selling voice only plans?

    ANR4 is slated for mid 2013, QOS and ‘higher speeds in Fixed Wireless network’ – a 25 mbit bump? L2 and L3 support, not sure what sort of services are waiting on that.

    Passive NR2, late 2012. delivers passive Fibre network Premises Install Equipment (PIE). not sure what this is, the mandated ditching of the batteries?

    unfortunately ive not yet seen (so far as ive read) any suggestion where there might be updates to the fixed line in terms of 1gbps though :(

    • might have found it now tho – p56 seems to indicate it is 2014:

      A Fibre product with speed options of up to 1 Gbps (1000/400 Mbps downstream/upstream)
      will be introduced in 2014 with initial speed options up to 100/40 Mbps. In all cases speeds are
      at a wholesale level only.

      • That’s the one nonny-moose. :)

        Original projection was for late 2013. But likely access to Telstra stuff later pushed back OPEX requirements, meaning a rebalancing of increased costs for providing new fibre products to a later stage.

      • I wonder of the 1Gb product is a factor

        “Mr Quigley said the average monthly revenue per user is expected to be about $20 until 2015, when it will rise to about $40. NBN Co predicts that it will make about $100 per month from each user in 2040.

        “The prices are just where we wanted them. It means that people are getting better services for the same prices on the NBN and what is especially good news is we are expecting speed and usage profiles to go up, which means we may even be able to bring wholesale prices down faster than we otherwise would,” he said.

        “And that is the aim – for a company such as NBN Co our aim is not to generate higher profits, our aim is to get wholesale prices down as fast as we can.”

        • @Abel

          Indeed it will be. As will Guaranteed Traffic Rates required by large corporations. Have a look at the uptake of 250, 500 and 1000Mbps plans in the ARPU section- they’ll make up almost 45% of the entire ARPU….THAT’s where the rising ARPU comes from, NOT largely from ordinary residences.

          Unless someone is suggesting average people will need 1000Mbps in 2025…..I don’t think so….

  4. Is it me or is there just a little bit of coincidence that the cost increase of 3.9%, if you scaled that increase by a factor of 10 (aka 39%) that the end result would be the noalition’s about $50bn figure?

    Just something I noticed…. not actually relevant, just somehow interesting in my mind.

    • @crenn

      Isn’t it a bit of a coincidence that the number of premises passed in 10 years is EXACTLY the number of premises in Australia?…..

      Sorry, but this sort of speculation is tinfoil IMO.

      • @seven_tech

        It’s no coincidence at all that the NBN passes all premises, after all, the satellite is meant to cover all of Australia.

        And I wouldn’t say it’s speculation, just something I noticed when reading the announcement today. I suspect that the cost of the entire roll out is near what they say it should be. Another 9 years is a long time relatively.

  5. on track with its rollout? what a joke. their map release date had 4 maps to be released for my area in june. it released 3. 2months later and lets check the map rollout excel spreadsheet to see if its been updated……oh wait. its been deleted. they got behind and started deleting the evidence that they are behind.

  6. NBNCo are still predicting that 50% of premises passed by fibre will be connecting at 12/1Mbps for the next few years and that it will drop to 40% in 2028.

    My guess is Telstra, Optus and Vodafone are formulating marking plan to poach many of that 50% as customers for a much faster 4G network.

    • @Matthew


      You don’t actually say where you’re going with that. If you mean a substantial portion will go on 4G only?….yes, well we’ve discussed this before and it is rather fruitless to give you facts and figures that refute that likelihood when I’ve done it several times before and you pay no attention….

    • lol 4g network with 6 million premises connected to it providing 25 megabits guaranteed bandwidth?

      Why you’d almost need a ubiquitous fibre network deployed to everyones homes to support the tower density! luckily someone is building that for Telstra and Optus.

      (psst. Telstras 4g network doesnt break 15 megabits in melbourne CBD at peak times – )

      • Dont feed the troll. Its been shown before that he ignores the simple fact that a 4G network, used as he sees it being used, needs a FTTH rollout anyhow. So in effect he’s endorsing the FTTH project.

        I’m starting to think the new term I just typo’d of trollout works in this case. Lets get that one to stick :)

    • “and that it will drop to 40% in 2028.”

      False. It’s 36%, and yes it does make a difference. Please learn how to count and read graphs correctly. People will rightly assume you have some kind of irrational bias if you don’t.

      “My guess is Telstra, Optus and Vodafone are formulating marking plan to poach many of that 50%”

      Great. More people on these wireless plans means less on 12/1mbps NBN. The percentages change and just like that you are proven wrong again.

  7. so to sum up, this failure will now be estimated to cost us not 42, but 47 billion dollars


    • That’s ok. Just don’t get an NBN connection and then you don’t have to be part of the US that pays for it. Stick with your overpriced adsl and wireless instead.

  8. So where is the critical Delimiter “analysis”? Over budget (already), down on revenue and significantly behind schedule on customer sign ups and fibre roll out.

  9. A Major part of the issue is the comments of supposed experts, possibly fact checking of the comments of these individuals who are actually destroying their credubility not only on this subject, but queries are then in order for all their “expert opinion” may well be in order.
    We are not necessarily qualified to analyse his economic arguments, but one can only assume the accuracy and standard is commensurate

    In fasct the obverse is true

    The one intermediately following the NBN Corporate plan is a Doozy. Yet they are influential and believed

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