NBN Co dumps FTTP plan for another half a million premises


news The National Broadband Network Company this afternoon revealed up to 550,000 less Australian premises would receive the full Fibre to the Premises rollout than had been previously been planned under the Coalition’s Multi-Technology Mix, with the project’s funding requirement also blowing out by between $5 billion and $15 billion.

The original version of the NBN as envisioned by the previous Labor Government called for 93 percent of Australia’s approximately 13 million premises to be covered by a full FTTP rollout, with the remainder to be covered by satellite and fixed wireless technology.

When the NBN company published its Strategic Review document in November 2013, several months after that year’s Federal Election, it recommended to the incoming Coalition Government a so-called ‘Multi-Technology Mix’ model in which only 26 percent of that 93 percent (or about 24.2 percent of the 13 million total premise count) would be covered by the FTTP rollout.

The remainder of the fixed-line footprint was to be covered by the Coalition’s preferred Fibre to the Node and HFC cable technologies, which are technically inferior to the FTTP model. They feature a cheaper up-front cost and re-use the copper and HFC cable networks owned by Telstra and Optus.

However, in this morning’s corporate plan (available in full online in PDF format), the NBN company revealed it would further water down the percentage of Australian premises which would receive the full FTTP version of the network, with only 20 percent — not 24.2 — of total premises to receive the fibre version of the network.

Estimates of the total amount of premises in Australia varies, with most figures placing it between 12 million and 13 million. This morning’s announcement, then, means that between 500,000 and 550,000 less premises will receive the original FTTP version of the NBN.

Technology2013 NBN Strategic Review mix (% of total)2015 NBN Corporate Plan mix (% of total)
Fixed WirelessTotal of 7%, including satellite5%
SatelliteTotal of 7%, including Fixed Wiress3%

In the NBN Strategic Review, about 41 percent of total premises were to receive the Fibre to the Node or Fibre to the Basement versions of the NBN, while about 28 percent were to receive the HFC cable version.

The new NBN corporate plan released this morning shows that the percentage of premises set to receive FTTN/B connections has dropped to about 38 percent, while the percentage of those set to receive HFC cable connections has grown significantly to 34 percent. The percentage of those set to receive fixed wireless or satellite connections has grown slightly.

“The strategic MTM planning approach determines which technologies are utilised on an area-by-area basis so as to minimise peak funding, optimise economic returns and enhance the viability of NBN,” the plan states.

The other major revelation from the NBN corporate plan this morning is that the funding requirement for the project under the Coalition Government has dramatically increased from previous estimates.

The NBN Strategic Review estimated peak funding requirements for the NBN to be about $41 billion, of which the Coalition Government was to contribute $29.5 billion, and the rest would be sourced from private capital markets. However, this figure has blown out to between $46 billion and $59 billion, with a “base case” estimated by the NBN company at $49 billion.

However, the NBN company may face difficulties sourcing capital from the private sector. Its internal rate of return on its infrastructure investment — which had been as high as 7 percent under Labor — has now shrunk to between 2.7 and 3.5 percent — even smaller than the IRR of between 3.1 percent and 5.3 percent that the Strategic Review had estimated for the MTM model.

The plan estimates that the cost of an all-FTTP rollout would require peak funding in the rank of $78 billion to $84 billion, with a completion date of between 2026 and 2028 — as compared with a completion date of 2020 for the current MTM plan.

“Formidable turnaround”
In a press conference this afternoon associated with the release of the new NBN corporate plan, Communications Minister Malcolm Turnbull said the new management of the NBN company had achieved a “formidable turnaround” in the company’s fortunes, stating that its chief executive Bill Morrow and his team had “done a remarkable job in getting this project on track”.

The previous management of the NBN company (led by its then-CEO Mike Quigley), Minister Turnbull said, had “missed every single target” the company had set, and “by a very wide margin”.

The company’s new cost estimates — including the multi-billion-dollar funding blowout — were based on the fact that the NBN company now knew more about deploying high-speed broadband than “anyone else” in Australia. “All of that information and experience,” the Minister said, had led to its revised funding estimates.

When the Coalition took over the NBN, the Minister said, the NBN company’s cost accounting systems were “frankly, so poor”, that they did not know how much it was costing to connect premises with fibre.

Labor has stated it would use a “two step” model for rolling out the NBN if it wins power in the next election, likely to be held in 2016. This will presumably involve continuing to support some of the Coalition’s current MTM model.

However, Minister Turnbull notes that there were Labor supporters who would go back to the all0fibre model. “They are saying to the millions of Australians who are impatient [for broadband] — vote Labor and wait another six year or another eight years — some would have to wait more than a decade,” he said.

“We are determined that all Australians would have access as quickly and as cost-effectively as possible.”

The NBN company also appears to have a revised headline target. The company’s chief executive, Bill Morrow, stated that it now wanted “8 million active users by 2020” — in other worse, 8 million Australians actively using its network by that date, rather than a headline figure of premises passed with the infrastructure.

Minister Turnbull stated in the press conference that the NBN company was “failing” at the time of the 2013 Election, and that the company itself “knew that”. He alleged that the company’s staff had felt “demoralised” at the time because they had continually failed to meet their targets.

Now, the Minister said, “everybody at NBN Co feels better about their job”.

Opinion/analysis to follow tomorrow.

Image credit: The NBN company


  1. “Its internal rate of return on its infrastructure investment — which had been as high as 7 percent under Labor — has now shrunk to between 2.7 and 3.5 percent”

    Despite an 8.1% YoY increase in ARPU ($37 to $40). The strategic review assumed 2.5% pa in the optimistic case, and 0% pa in the pessimistic case. Remember that this ARPU increase is entirely due to pre-MTM services…

  2. Wow, just wow … frankly the performance of NBN Co and the deliberate lies told by TurnBULL just makes me so mad I want to punch my screen right now!!!

    I’m not actually surprised tho, after all Im one of those that predicted here on Delimiter 1.0 that MtM would take 2 years before anything happened and that it would not be even remotely cheaper!

  3. These figures do not make sense!
    Strat Review / 2015 Corp plan
    FTTN/B 41 – 38%
    Fixed Wireless inc sat 7 – 5%
    Sat 7 – 3%
    How can the fixed wireless numbers and the FTTN numbers be reduced? The only way this is possible, if they do not offer 100% of the population NBN

  4. Richard
    So now it’s a peak funding of $49B with revenue if $18B
    Vs peak funding of $54B with revenue of $24B.
    The revenue is looking even more promising.

    • 70% take-up of 13m premises to be passed = 9.1M users

      Monthly ARPU continues to improve $37 to $40 however remains well below the ARPU predicted in the strategic review on COMPLETION (FY28) we discussed the other day: FTTP $6.6-7.5bn (ARPU $60-68) or MTM $6.3-7.2bn ($57-65) without significant annual price and/or usage increases.

      The latest corporate plan (2016) continues to show costs blowing out (as predicted). The cost predictions in the strategic review have now been destroyed (after destroy both the NBN corporate plans and the Liberal election policy), even with expensive FTTP premises to be passed dropping significantly.

      The farcical IRR of Labor’s policy of over 7% reduced to 3.1-5.3% on review. Revenue well short of predicted levels whilst costs growing significantly. ABS needs to review NBNCo’s GBE status, get these losses into the budget. There’s no way the company will recover its expenses.

      • Richard
        Again you like taking about the figures SR shows but not about the figures it doesn’t.
        Now by y28 MTM is expected to make almost as much a FTTP while only delivering an up to 25Mbps service. Having to do much needed upgrade in y25 for the less than 90% to get the fable min 50Mbps.

        Or do you want to mention the OPEX cost is in y28 is $200m dearer but Marrow has said to power the node alone would cost $200m a year which mention the other cost of keeping it running.
        As this corporate plan has shown the SR was a complete farce.

        • @jason hard to talk about figures not shown.

          Why do you think the strategic revenue limits to 25mbps in FY28? I suggest you read p17.

          Revenue in the strategic review is predicted to be comparable because they believe MTM available speed will capture most of the consumer demand.

          Power costs looks in the ballpark but the figure is insignificant compared to i) interest on addition borrowing required for FTTP or ii) projected revenue generated from the network.

          • Richard
            How can it capture consumer demand when it can’t deliver consumer demand. Remember min 25Mbps or 90% to get a min 50Mbps can you name 1 company that can deliver that mum speed. ATM NBN can only deliver that once per day. There current node design only delivers an average 5Mbps.
            So how can they deliver a viable speed when they can’t.

            Plus you have got back to me why HFC are getting a free upgrade to 100mbps+ speeds when it already need the 25Mbps requirement while people on FTTN getting once a day 25Mbps have to pay more that it would have Ben to deliver FTTP in the first place.

          • Indeed Jason,

            I also have asked questions (now on 3 occasions) which are also still unanswered/being ignored.

            Seems our friend has all the answers (ahem) to the questions which aren’t asked and no answers to those which are.

          • Richard,

            You are pushing shit uphill with every comment that you make.

            Stop. Please stop, FFS.

    • @Richard the cost blowouts are entirely under TurnBull’s watch, Under Conroy/Quigley NBN Co were on budget and NBN Co had found rollout savings that were hidden by TurnBull / NBN Co! (Project Fox)

      • @ Derek True Quigley continued the mantra “on target and budget” as he was leaving the building, but it was obvious at the time from the cost blowouts and construction delays this was ridiculous. This was repeatedly pointed out in another forum, denied by more than a few names here.

        NBNCo never realised any cost saving (all talk), their financial reports proved it.

      • B.s. Richard, parroting Turnbull’s lies doesn’t make it so.

        NBN may have been behind schedule but it’s finances where in excellent shape for the progress made!

        NBN co had its business plans externally audited under Quigley, i note that is no longer the case!

        • @derek NBNCo delivered far fewer premises for it’s spend than predicted. Cost per premises never approached the forecast $2300 per brownfield, actual data $3700 excluding $700 lease costs (CP16 p67).

          Who were the external auditors for NBNCo Corporate Plan 2012-15?

          • Annual Report 2012-2013
            External audit
            Under section 35 of the Commonwealth Authorities
            and Companies Act 1997, the Auditor-General is
            responsible for auditing the financial statements of
            NBN Co and its subsidiaries. In addition, NBN Co’s
            Annual Reports are tabled in Parliament and its
            financial accounts lodged with the Australian
            Securities and Investments Commission. The
            Australian National Audit Office (ANAO) has
            contracted with PRICEWATERHOUSECOOPERS to
            audit the company and the NBN Group on
            behalf of the Auditor-General.

          • @Mike and Derek

            Right annual reports. The annual report will be audited (a legal requirement), now to Derek’s claim re business plans (there’s a difference).

        • The Australian National Audit office, we arent talking hand picked Cronies such as failed mate like Ergas and Co (and yes I know he calls himself an economist).

          • @ derek The ANAO audited the annual report. Who were the external auditors for NBNCo Corporate Plan 2012-15?

          • If you can’t accept the official docs presented and need to try to discredit at all costs, while spreading totally baseless claims of behind budget, well… it really doesn’t augur well for one’s impartiality or willingness to discuss in good faith Richard.

            Particularly when you keep harping on about how behind budget and schedule FTTP was and ignoring (nay praising) the complete clusterfuck which is MTM.

          • @rizz p130-131 of the annual report 2013-15 is the (extensive) auditors declaration.

            Now Derek’s claim re business plans? This is pretty basic stuff.

            The NBN is a stuff up (both parties). How could you not get that from my posts?

  5. Cost blowout to $56 billion. Only 20% on speeds higher than 25/5 in 2018, not much better than ADSL2+. FttP down to 20% and no vision to increase that to the majority as the end goal. Corporate plan padded with fluff photos. Three pages used for management team alone. What a mess.

    • Yes Hubert, an utter, colossal cluster#### that anyone with half a brain could see coming. Visionless garbage that will hamstring this country for decades.

      Unfortunately, far too many Aussies left their thinking caps behind and fell for the host of LNP lies and drank the Koolaid…..and hasn’t it left a nasty taste in so many mouths!

      It is utterly depressing….and what’s worse is that Malcolm will probably get away with his actions largely scot-free….what a disgraceful human being. All the worse because he understands the damage he has done to our country.

  6. Its not surprising its been happening over the last year or two. Been very obvious in the so called ‘Modbury’ (SA) black spot area (technically I think the blackspot area is next to Modbury its just the outskirts of that exchange area).

    They have been culling sections bit by bit as the money ‘runs out’ since the Libs put a freeze on everything. I think the MOD08 zone is the last one to be ‘cancelled’ (there’s fibre in some streets too sadly apparently) instead HFC will be its saviour. Even worse the actual black spot won’t be done either as it was in a latter zone!

    Not sure if those numbers are meant to add up to 100% or they’re not sure what will fill the gap?

    Also taking a cheap shot at the former board …. wow just wow. I guess Ol Malcom has figured out Labour were just buying their time waiting for closer to the election date to unleash on NBN and rather opting for a more +ve perspective in tech news so he’s now back to his old tricks of NBN Co bashing (maybe that’s why they needed to change the name).

  7. Let me get this right. Not only are they cutting FttP by half a mil or so, they’re also delaying the rollout of FttN. With a budget blowout to $56b. And no meeting of their 2016 target of 12 Mbps (or whatever it was) to everyone.

    Remind me again of how this is ‘faster. sooner. cheaper’…

    • See page 29:

      “The high level analysis has enabled management to confirm that despite higher than anticipated cost and risk, MTM remains a superior strategy to an all-FTTP rollout for fixed line areas. Management estimates that
      an all-FTTP fixed line rollout could be completed by 2026 but possibly as late as 2028, with a peak funding range of $74-84 billion (vs. $46-56 billion for MTM) depending on critical sensitivities around peak construction rates, construction and operating cost, and revenue generation.

      First positive free cash flow is estimated to be achieved between FY26 and FY31 for an all-FTTP fixed line rollout (vs. FY22 for MTM).”

      So whilst ‘faster. sooner. cheaper’ it’s a not cheap! What productivity improvements / competitive advantage / economic benefit is going to cover the cost to the economy of this policy folly?

      • more fraud from Captain FraudBand and Co!

        Where is the external audit by a big reputable accounting firm that ALL prior NBN Co Biz Plans where subject too? Sorry Richard but “your team” is a bunch of snake oil salesman and con artists!

      • Heres the thing. FttP being completed by 2026, or even 2028, is better than MTM being completed by 2020, which I struggle to see happening. They’ve delayed the rollout of FttN, how in hell are they going to get it done inside of 5 years? Even if they DO get it done by 2020, its only going to be built over during the next decade anyway.

        Go back to the last election and look at all the words they used. Faster. Cheaper. Sooner. Faster internet, by 2016, for $29.4b.

        Which of those are they going to deliver? If they’ve gotten those wrong, what else have they gotten wrong? Perhaps everything.

        • Dont worry GongGav, GimpCo have that all covered with the additional disclaimer on Page 39:

          management and the Board do not give any guarantee or assurance that the results, performance or achievements expressed or implied by the outlook will actually occur. The Operating Plan addresses the period FY15-FY22 only

          I wonder what happened to all that confidence the coalition clowns had in getting 25mbps to everyone by 2016. Surely they weren’t just trying to fool everyone to get more votes…

  8. Labor might have missed targets but so has Turnbull. If they actually ask people already on FTTP what they think of it vs their ADSL connection then they will find a lot of support for FTTP. Anyone with half a brain knows that fibre is the way to go. People might have a problem with poor ADSL services now but if they know they will be getting FTTP in future then that’s a smaller problem than the one they will have with crappy FTTN, as they shall find out in a few years time or after a bit of rain if the government goes through with FTTN.

    • “If they actually ask people already on FTTP what they think of it vs their ADSL connection then they will find a lot of support for FTTP.”
      On 25/5 with Skymesh and my upload speed is consistently faster than the connection/download speed I got at any of the ADSL2+ connections I’ve had throughout the wider Brisbane region. No dropouts, ever.

      The suggestion that ADSLs biggest problems will somehow be fixed with VDSL is ludicrous.

  9. Yep – I’m on Labor FTTP NBN – runs at the speed of light. I could not buy/rent a house in a non fibre NBN location again.

    But I only have half of my solution. The other half of a fibre solution is for everyone else to have fibre so that I can trade with them.

    On this I want to hear a clear coherent commitment from Labor to put glass back into 93% of premises like they were going to do previously. Just like the Greens have committed to work towards.

  10. I was under impression it was compulsory to connect to the NBN. What a relief when the contractors came to inspect my house to see where to run the wire thingy I told them not to worry as I don’t really want the NBN. They said fine and continued to the neighbours place ,no arguments, animosity and very polite people to deal with.

    • TC
      Basically you have 18Mths to switch if you still want to use your land line after that Telstra disconnects you.

      • I haven’t got a land line. Was never connected to it when the house was built. Owner had land line to an old run down shed at the back of the property that he use to live in while he built the house. By the time he finished mobile reception was available so didn’t bother connecting copper to the house. I think the snakes and spiders are getting more use of the land line… Every now and then I check to see if there is still a dial tone or not

        • Your actions may affect the value of, and/or the ability to sell, the property.

          Can you live with that?

  11. Yes no problem living with it….bought a house to live in not to sell it…spent years saving so I could buy it without having to get a loan … I aint going to sell it…bit like putting seat covers in your car…waste of time really…only looking after it for the next owner!!!!

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