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.