Quigley clarifies Senate NBN profit ‘misconceptions’


NBN Co chief executive Mike Quigley has attempted to clarify controversial comments he made during Senate questioning last week about the National Broadband Network’s commercial return, saying they didn’t tell the full story about the NBN’s profitability.

Quigley had been reported to have said in response to Senate Estimates Committee questioning that the $43 billion NBN wouldn’t make a financial return for 30 years.

But at the Communications Day Summit in Sydney today, he said he wanted to address such “misconceptions”, although he noted he had not been misquoted — just that there was more to the story. “The Senate discussion moves along fairly rapidly,” he said.

NBN Co’s business case, Quigley said, showed three critical aspects to its profitability.

Firstly, he said, NBN Co would generate a positive return on its costs before the end of the construction period of the fibre infrastructure — in other words, it would be EBITDA (earnings before interest, taxation, depreciation and amortisation) positive before the end of construction.

Secondly, Quigley noted that NBN Co was planning to recover yearly capital costs during the construction period — meaning it would be net income-positive after the buildout was finished.

And lastly, the NBN Co supremo noted the government business enterprise was planning to repay the Government’s equity contribution to the project — expected to run into the several tens of billions of dollars — within a 20 to 30-year time period.

Quigley said this time frame wasn’t unusual and pointed out that other telecommunications players such as US carrier Verizon was rolling out infrastructure with expected return to come along a similar period.

Some of the commentary around the NBN has focused tightly on to what extent the company will be attractive to commercial investors when the company is eventually privatised. But Quigley also noted Communications Minister had stated that the NBN was a project that had other aims than just having a commercial return.

Quigley also attempted again to address the ongoing debate about whether the NBN’s fibre fixed infrastructure would be made irrelevant by the incoming wave of fast 3G mobile broadband services. “I want to clear up this misconception that it’s either wireless or fixed, because it’s both,” he said.

The executive said NBN Co had put together some calculations “on a Saturday afternoon for the sheer fun of it” on a hypothetical case of building the NBN purely with wireless technologies.

To build a network which would provide 5Mbps broadband (the fibre NBN promises 100Mbps) on a reliable basis with committed bandwith to each user in 60 percent of the population, he said, Australia would need some 80,000 cell towers. There are currently about 16,000, he said.

“It’s no accident that fibre to the premises is happening on a worldwide basis,” he said. And Quigley took one final jab at those that believe wireless services will make the NBN irrelevant.

“If you have 80,000 cell sites around austraila, what do you connect them with? With fibre,” he said.

Image credit: NBN Co


  1. That last line is a pretty good zinger.

    80,000 mobile phone towers is a bloody lot – I can’t imagine people being too happy with there being one in every other backyard.

    The other thing to remember is that it’s highly unlikely that wireless data speeds are ever going to supersede wired speeds.

    Plus, if they’re going to build out a wireless network, surely they should be looking at various 4G options, rather than 3G.

    • I dunno Matthew — I have been to Japan, they have a stack more infrastructure than we do dotted around the landscape, and they seem to like it OK. I think we’d get used to it, as we’d get used to overhead cabling. I do agree broadly with Quigley when he says that we will always need both wired and wireless connections. But that doesn’t mean I agree that the NBN’s profits won’t be totally cannibalised by wireless ;)

      The technical game is not the commercial game.

      • The mobile/wireless network coverage maps don’t tell the truth. Try and get and maintain wireless connection while inside a house that isn’t in the CBD. e.g. suburbs in QLD 40klms north of Brisbane
        With 3/Optus/Vodaphone/Telstra (Other than possibly Telstra Next G rural phones), it’s a bit like trying to get a TV signal using rabbit ears (antenna) – stand on one foot it a particular spot in the house with your arm on an angle and at an uncomfortable height.

        Other than the coverage problem you comment about the fact that the speed will be 20x SLOWER with those extra 64,000 cell towers. Bit of waste? They’ll cost a bit too.
        I’m not opposed to wireless just not happy with the service. If they could improve speed and connection strength, then it might work,. unless there are other issues (anyone looked at latency?)

        Don’t want overhead wires either – to susceptible to being damaged in storms.

        The two main political parties are shooting themselves in the feet: the ALP wanting to put in mandatory ISP filtering and the Liberals (Tony Smith) wanting to replace the NBN fibre with wireless – no thanks.

        • You’re right about the coverage maps, Cam. The only exception to this that I have found is Next G. Those who follow my articles would know I’m hardly a Telstra stooge, but I would say the claims that they have made about the network, in terms of being able to get it inside big buildings — the signal penetration — and it being “everywhere you need it”, have been true for me.

          In comparison, my Optus iPhone has been a shocker. The reception is in and out, depending on where you go — just as you describe.

          Re filtering, I wish the Opposition would just come out with a policy to block it, and we can all go back to sleep and stop angrily ranting about it. But wait, that wouldn’t be good for the media, because our page impressions would go down. Oh we, we can live with that ;)

Comments are closed.