We must determine how the $15bn NBN cost blow-out occurred

By
Renai LeMay
-
79

opinion The full resources of the Federal Parliament and other Government accountability mechanisms must be deployed to determine how a cost blowout of between $5 billion and $15 billion was allowed to occur in the National Broadband Network, and how to stop a similar situation from occurring again in future.

One and a half years ago, I was invited to the North Sydney headquarters of the NBN company for the release of the new Coalition Government’s first major report with relation to the NBN project.

Dubbed the NBN ‘Strategic Review’, the document (PDF) had been put together at a frenetic pace over the three months after the Coalition won power in the 2013 Federal Election. The effort was led by JB Rousselot, a former Telstra and OzEmail executive who had been hired in October that year by the NBN company as Head of Strategy and Transformation.

Much of the grunt work was conducted by three major consulting firms — Deloitte Touche Tohmatsu, the Boston Consulting Group and KordaMentha.

The importance of this report cannot be understated. It severely criticised the former Labor Government’s Fibre to the Premises-based NBN policy, stating that it would cost many billions more than the NBN company had previously estimated. And it recommended the Multi-Technology Mix approach, which the Government and the NBN company has adopted, of re-using copper and HFC cable networks for the NBN rollout.

At the time the NBN Strategic Review was released, Communications Minister Malcolm Turnbull clearly regarded it as canonical.

Attending the Sydney event via teleconference, the Minister was flanked by representatives from the NBN company and the consulting firms. All present emphasised how much work had gone into the Strategic Review.

“Importantly,” the Minister said at the time, “all forecasts in the Strategic Review have been arrived at independently by NBN Co and, in the view of the company and its expert advisors, are both conservative and achievable.”

“The advice contained in the Strategic Review will be a crucial input into Government policy, setting out as it does the facts on the current NBN and realistic and informed analysis of options to vary its design and delivery.”

Well, as it turned out, the information contained in the December 2013 NBN Strategic Review was completely wrong.

This morning, Minister Turnbull published a new cornerstone document, consisting of the NBN company’s 2016 Corporate Plan (PDF).

If the plan is to be believed — and the Minister strongly emphasised today that it is — then the NBN Strategic Review underestimated the peak funding required to complete the NBN project by at least $5 billion and perhaps as much as $15 billion over the life of the project.

That is, the NBN Strategic Review was wrong in its costings of the Multi-Technology Mix option by between 12 percent and 37 percent.

This morning, the Minister carefully laid the blame for this extraordinary mistake squarely at the door of the previous management of the NBN company — former chief executive Mike Quigley and his team, who founded the NBN company and got the project off the ground. And blame was also laid at the door of the former Labor Government — essentially, the project’s responsible Minister, former Communications Minister Stephen Conroy.

There may be some degree of truth to Minister Turnbull’s allegations. It is clear that Labor significantly underestimated how much effort it would take to complete its ambitious fibre-based NBN project. And I agree with the Minister when he alleged yesterday that it was “extraordinarily crazy” of Labor to hand this project to a brand new startup company. In almost every other country globally, these massive projects are primarily being handled by huge incumbent telcos.

However, the fact remains that it was not Stephen Conroy or Mike Quigley who delivered the NBN Strategic Review. That honour remains with NBN company executives primarily appointed under Turnbull’s watch — JB Rousselot and NBN chair Ziggy Switkowski, as well the three accounting firms who assisted with its construction.

And ultimately, as the presiding Minister, it is Malcolm Bligh Turnbull himself who must take responsibility for the delivery of that report — with its up to $15 billion mistake regarding NBN cost estimates.

Now, I do not know how the error was made. I do not know precisely whose door we should lay this colossal incineration of public funds at. I do not know to what degree the fault lies with Labor, the Coalition, either era of management at the NBN company, or the consulting firms involved.

However, I surely know how to find out.

Today I am writing to a number of diverse parties to invite them to officially investigate how this massive error was allowed to occur, and how the Government and the NBN company can prevent it from occurring again.

I am writing to Senator Jenny McAllister, the chair of the NBN Senate Select Committee, to request that the Committee call Ziggy Switkowski, JB Rousselot and the three consulting firms who constructed the NBN Strategic Review to attend public hearings of the Committee and help the Committee investigate how the mistake was made.

I am writing to Federal Auditor-General Grant Hehir to request that his office undertake an audit of the NBN company’s cost accounting processes over the past three years, with the aim of determining how the vast differences between the estimates contained in the 2013 Strategic Review and 2016 Corporate Plan were able to come about.

These organisations may wish to start, as Financial Review journalist Tony Boyd has, by interrogating the assumptions in the NBN Strategic Review. Boyd writes of what he describes as “heroic” assumptions in the document, including the idea that the ownership of the HFC cable networks could be switched over to the NBN company “with a click of the fingers”.

Lastly, I am writing to the NBN company and the Department of Communications, to request that correspondence between those entities and Minister Turnbull’s office in relation to the consideration of the 2016 Corporate Plan be released. This correspondence may assist in determining how long the NBN company and the Government have been aware of this up to $15 billion discrepancy.

There are also further avenues open to seek key pieces of information in relation to this cost blow-out. The Senate has previously compelled Governments (both Labor and Coalition) to release corporate documents from the NBN company. It may assist with this process again.

I stress that today, I make no judgement and apportion no blame as to the grossly wrong estimate which was made with relation to the NBN company’s costs. My efforts in seeking this information bears no relation to the fraught political process around the NBN. In point of fact, I could not care less which political party — Coalition, Labor, Greens or even Motoring Enthusiasts — is most successful at delivering the NBN project. I suspect that the mistaken estimate of the NBN’s costs will actually cross the date lines of different Governments. Late 2013 was, after all, a transition period.

Like the vast majority of Australians, all I ultimately care about is that the project does succeed and that we are all able to access high-speed broadband. I also care about the cost of the project — I do not want the public’s money to be mismanaged, especially on a multi-billion-dollar scale.

Then too, I’m a journalist. It is the job of journalists to seek objective truth and determine facts so that the public can be informed about the activities of those who hold power over them. I cannot think of a more appropriate situation to apply a little journalistic rigour than when a cost blow-out of up to $15 billion has been disclosed.

We live and breathe in a year in which the Government has mandated reviews be carried out into the appearance of a single individual on the ABC’s Q&A program. How much more effort, then, must we apportion to a process which appears to have seen up to $15 billion vanish into thin air. The answer: A great deal.

Related posts:

  1. Turnbull has “no-one else to blame”, Labor says on NBN cost blow-outs
  2. Quigley’s right: Morrow says $15bn NBN blowout “mostly” relates to MTM
  3. Labor issues detailed evidence for Turnbull’s MTM delays, cost blowouts
  4. Quigley releases detailed evidence showing MTM NBN cost blowout
  5. NBN Co dumps FTTP plan for another half a million premises

79 COMMENTS

  1. If, assuming that there is an audit, I suspect that the people doing the auditing will be hand picked like the people who did the “strategic review”.

          • Seems your brilliant (ahem) plan has blown out Richard…

            Still coming in less than Hockey’s revelation that MTM would be costing the government $70B, though.

          • Still coming in less than Hockey’s revelation that MTM would be costing the government $70B, though.

            Give them time Rizz, they haven’t even really started rolling FttN out yet…

          • But would it apply to how much of what the Auditor General finds can be shared with those who pay the bills? Mug consumers.

  2. Well said. We as a country simply cannot let a cost blow out of up to $15B on a GBE infrastructure project go unquestioned. With this new Corporate Plan, NBNCo and the Govt are asking the taxpayers to accept an increase in costs of extraordinary proportions.
    The amount is so large, the variance so great, that questions have to be asked regarding the integrity of previous financial reports, reviews, recommendations and claims made by political stakeholders, NBN staff, consultants, and others. If it takes a Royal Commission then so be it. But Australia’s telecommunications industry, landscape, and future economy is far to important for it to remain a political and financial football.

    There needs to be an *independent* forensic analysis of the entire NBNCo GBE including management, financials, review of reports and advice, and a full Cost Benefit Analysis of all the options. Not one controlled by political/philosophical interest. Then determine a long term plan that provides for the future of Australia and certainty for the industry and consumers.

    Sorry but I’m so sick of the BS, spin, and political games. And all the while we as a country fall further behind our international competitors. Enough is enough.

    • +1 Paul Hahn. Sorry but I’m so sick of the BS, spin, and political games. And all the while we as a country fall further behind our international competitors. Enough is enough.
      But as i have said before the buggers will shrug there shoulders and walk away with a few mil in the bank and nothing happens.The shits should go to jail,but they wont.

      • hugh miller – yo are absolutely 100% correct.

        All the government departments, Malcolm Turnbulls’s office – NBN Co themselves have dodged, spun , wriggled and BS’d their way through the muck.

        The source of the problem is simple though. Telstra was a big, ugly, nasty bully. To Canberra the only natural solution was create a bigger, uglier, nastier bully than Telstra.

        …and so the bureaucrats set about to make it so.

    • +1 spot on Paul. Bring on a Royal Commission.

      NBNCo performance a disgrace, denied for too long. Renai limits his request to post election but the rot started much earlier (and why Clare won’t do anything).

      Peak funding from strategic review MTM ~$39bn blowing out to CP16 $46-56b, peak funding under previous management FTTP CP11-13 $40.9b then CP12-15 $44.1b blowing out to SR (S1) ~$73bn or redesigned (S2) ~$64bn, now CP16 $74-84b. Quigley continued to state publicly “on time and budget” when it was clearly untrue. The Boards should be held to account for these continual misrepresentations, ASIC open your eyes.

      Similarly the GBE status of NBNCo should be reviewed by the ABS and revoked. Clearly this is not a commercial entity, yet another sinkhole for taxpayer money.

      Turnbull’s contortion on funding “govt equity limit $29b but we’ll guarantee NBNCo borrowing” is the same as taxpayer borrowing the lot (but higher interest). Rudd/Conroy thought they could start and run a multi-billion dollar business, obvious now they couldn’t (pointed out at the time). Turnbull bought into this policy folly, his instincts govt should be out ignored. Taxpayers (the few net contributors) carry the burden.

      • “I stress that today, I make no judgement and apportion no blame as to the grossly wrong estimate which was made with relation to the NBN company’s costs. My efforts in seeking this information bears no relation to the fraught political process around the NBN. In point of fact, I could not care less which political party — Coalition, Labor, Greens or even Motoring Enthusiasts — is most successful at delivering the NBN project. I suspect that the mistaken estimate of the NBN’s costs will actually cross the date lines of different Governments. Late 2013 was, after all, a transition period.”

        Can you not read? And Renai has been pretty critical of all involved. Indeed prior to the current government taking power Renai defended Turnbull and the FTTN plan. However the reviews were full of glaring mistakes and issues that were never properly accounted for. Enough that those with a modicum of knowledge of the topic could question it.

        I personally have no argument with the NBN vs no NBN, in many ways a commercially driven process may have achieved better results.

        But this is not that argument. This is FTTP NBN vs MTM NBN, and in that respect the strategic review is very questionable. Further, I personally believe that it was political, rather than Financial or Technical decisions that lead to this path.

        • Someone can’t:

          “I am writing to Senator Jenny McAllister, the chair of the NBN Senate Select Committee, to request that the Committee call Ziggy Switkowski, JB Rousselot and the three consulting firms who constructed the NBN Strategic Review to attend public hearings of the Committee and help the Committee investigate how the mistake was made.

          I am writing to Federal Auditor-General Grant Hehir to request that his office undertake an audit of the NBN company’s cost accounting processes over the past three years, with the aim of determining how the vast differences between the estimates contained in the 2013 Strategic Review and 2016 Corporate Plan were able to come about.”

          There should be no doubt in anyone’s mind a commercial driven solution would have delivered better value. The elephant in the room remains why wasn’t a CBA produced in the very beginning. The cost blowouts have been pointed out since the very first numbers; the “modicum of knowledge” crowd denied it then, still denying the FTTP extraordinary costs and shrieking build it!.

          • NBN business executing a detailed Business Plan, on-time and on-budget, and running substantially ahead of revenue financial projections.
            or
            “The cost-benefit analysis method essentially measures the net worth of a project, not its economic impacts.”

            Now Richard now claim waste $billions when the SR states that Quigley was on budget and on time

          • Sigh Richard, commercial enterprise refused to invest, which is why NBN Mk 2 was required. Which part of this factual part of history do you still not grasp or continually refuse to accept? You do know ‘denial’ is a river in northeastern Africa ;)

            Also, you keep stating without foundation whatsoever, that Quigley was lying about the costs of FTTP.

            I find this completely disingenuous and a clear breach of guidelines here. Just because you keep repeating the same spiels, doesn’t make the spiels any more factual.

            As such, I point you towards two commenting clauses which you may like to familiarize yourself with…

            *Comments which display a lack of rationality or reasonableness. For example, a number of commenters on Delimiter over the past year have engaged in the debate, but consistently avoided acknowledging substantive issues raised by other commenters in relation to their argument. Instead, they have deliberately diverted the discussion down another path, annoying many other commenters.
            *Comments which inject demonstrably false information into the debate (for example: “Fibre broadband only offers speeds up to 50Mbps”). Often I will leave these be, if other readers correct the record. But if it’s done consistently, it’s a problem.

            So, if you have proof present it or retract?

            BTW- You will find that because we aren’t here on a politically driven, ideological crusade (simply, myself and most here, IMO, believe FTTP is the way to go, it aint rocket science), that unlike your good self who quite clearly needs all info to fit neatly within the insular blinkered bean counter/political dogma, if actual proof was to be presented, I/we won’t just brush it aside and pretend it doesn’t exist or worse lamely argue.

            Thank you

          • That’s fine but that is not at question here.

            The Question is whether the Strategic review of 2013 was incorrect, and more so whether it was purposefully incorrect to support political decisions.

            The Decision to do the NBN or Not is not the question here. Stop muddying the waters with pointless rhetoric. Did you attempt to contact the people Renai is contacting in an effort to have the original decision to create the NBN reviewed?

            A commercial driven solution is not always better value. Value is a subjective term. Value for a nation is not the same as value for a private commercial interest.

          • Delusional is the belief the original corporate plans were on target (deployment nor revenue).

            The budget blowout confirmed by both the strategic review and new corporate plan. The $3700 + 700 (lease) actual premise cost in the FTTP footprint alone more than the total budget.

            In the private sector a Board and/or CEO would have to answer questions as why they were so uninformed as to the companies performance. I’ve not used the word lying.

            I accept few here have any of the knowledge or experience of company operation or financing, however to believe FTTP was ever an option for the original peak funding of $41b is extraordinary ignorance.

            FTTP option off the table (except Greens) because of known, historical performance. We’re down to arguing the 30% FTTN, FTTP reduced even further in the latest plan to reel in costs.

            As posted yesterday the peak borrowing for this policy folly is approaching (FTTP exceeds) the market capitalisation of Telstra.

            The incompetency displayed by the management teams for such blowout without knowledge is unprecedented, with knowledge misrepresentation. Either deserve explanation.

          • We’re down to arguing the 30% FTTN

            No. It’s 38% and 34% for HFC.

            FTTP reduced even further in the latest plan to reel in costs.

            Which is even more laughable when you consider FttN is costing just as much for an vastly inferior product. That FttP reduction to 20% isn’t a good thing btw, it just means even more money will be required to bring it up to standard sometime in the future that some cant see because of irrational political biases.

          • @Richard
            You are assuming that there was no expectation of blowout on the FTTP project. Having dealt with Government, Government Enterprise, Corporate, and Corporates working for Government, blowout was inevitable.

            However at the moment based simply on the numbers that either side provides. The veracity of which may be questionable, but still based on those numbers, it is clear that the current MTM solution is costing more than the FTTP solution. Not being privy to the real figures I can’t answer with the truth and must go on the figures that were released by the successive governments and organisations.

            Having looked at both plans, during the election. The FTTN plan was clearly lacking in areas. Missing very significant factors, that the FTTP plan included. Not least of which was maintenance of the copper.

            “I accept few here have any of the knowledge or experience of company operation or financing, however to believe FTTP was ever an option for the original peak funding of $41b is extraordinary ignorance.”
            I personally didn’t But I also didn’t believe that it would get anywhere near the $90 billion mark. Further the FTTN plan only costing $29 was also unbelievable based on the details provided.
            In fact when comparing the details provided, the areas of failure and potential blowout in the FTTN plan were much more obvious than in the equivalent FTTP plan.

            Delusional is an interesting term. I have no doubt there are delusional people on both sides of the fence. People who refuse to accept that their side could ever do wrong. Personally I try and look at everything from a technical, financial, and long term prospect. And at this point, based only on the last costs of each, and the knowledge that FTTN will need to be upgraded. The MTM is costing more than the long term benefits of the technically superior FTTP plan.

          • You’ve repeated your claim of Quigley’s FTTP having cost blow outs again without proof Richard. Do you actually have the decency to either put up or STFU? Sorry to be so in your face but…

            Plus here’s a gem for you, after continually deriding Quigley and Co and not giving them any latitude whatsoever, for not achieving their own “aggressive” roll out targets (much more aggressive targets than MTM targets, which is supposed to be faster anyway) yet they were infinitely closer to their targets than MTM is to their easy targets – 2016 anyone?

            BILL MORROW (current NBN CEO) 24 August 2015: “I think we need to keep in mind the magnitude of this project. What we’re doing here is uncharted in many other areas, unprecedented in many ways. So anybody that thinks that you can predict and come in exactly on a dollar is fooling themselves.”

            Wow I actually have to agree with him for once, even though his job is infinitely easier than Quigley’s, as MQ’s was completely from scratch whereas BM has all of the groundwork in place for him. Yet Morrow’s/Turnbull’s impostor clusterfuck NBN, has blown the budget by another $15B… and done SFA in doing so…

            *shakes head*

          • @rizz A dozen posts in the last week demonstrates your position re no proof is not true, actually no evidence has been presented that supports the “on time and budget” claim.

            FTTP deployment was demonstratively behind schedule even when including service class zero (exclude by their own ready for service definition CP11-13 p13). Figures provided in comments “NBN Co doubles coverage, user base over past year”:

            Corporate Plan 2011-13 2,711 / 3,256
            Corporate Plan 2012-15 1,307 / 1,681
            Actual FY14 (inc SC0) 492 / 604

            Revenue well below expectations, “NBN Co dumps FTTP plan for another half a million premises”:

            “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.”

            Quigley repeatedly estimated $2300 per FTTP premises, comments to article “NBN Co dumps FTTP plan for another half a million premises”:

            “Cost per premises never approached the forecast $2300 per brownfield, actual data $3700 excluding $700 lease costs (CP16 p67).”

            Quigley estimated peak funding of $44.1b, cashflow positive FY22. In comments to article ““Criminal”: MyRepublic CEO mourns loss of Australia’s “marvellous” NBN vision” we discussed figures from the strategic review:

            “Combined with lower costs (total, even though opex is more $27b vs $23b) NBNCo cashflow positive in FY22 (vs FTTH 25-27), peaking funding of MTM $39b vs radically redesign FTTH $54b.”

            Quigley claimed IRR above 7%, in comments to article titled “NBN Co dumps FTTP plan for another half a million premises”:

            “The farcical IRR of Labor’s policy of over 7% reduced to 3.1-5.3% on [strategic] review.”

            Quigley claimed completion June 2021, commented to article “NBN Co dumps FTTP plan for another half a million premises”

            “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.”

            You continue to complain my claims are not supported, when the opposite is true. Commenters continue to post FTTH discredited corporate plans forecasts as if they still exist.

            “So anybody that thinks that you can predict and come in exactly on a dollar is fooling themselves.”

            We’re not expecting exact figures (projects have contingencies). However when the numbers are obviously wrong they should be corrected. This was pointed out to you years ago as the data was released. When they are out by $40b people should be held accountable.

            Then and now you still can’t see the connection between actual underperformance and the effects on forecasts. Proudly not a bean counter.

          • @Richard

            “Cost per premises never approached the forecast $2300 per brownfield, actual data $3700 excluding $700 lease costs (CP16 p67).”

            As an Account you should know better than to mix CapEx and Opex together like that, we arent fooled even if you are!

          • I did promise not to argue if you at least tried, and you did at least try and try very hard, so genuinely, thank you, Richard.

            But no banana… and whilst not arguing I will take my right of reply…

            I now see that your argument is simply one based upon using Turnbull’s most glowing bean counter figures (as usual ignoring the B in CBA) as gospel and then comparing them to Quigley’s, and then strangely suggesting this is proof that Quigley was wrong.

            Even having seen the two years of nothingness, $15B blow outs (or spending $70B on MTM according to Joe) you still believe Turnbull/NBN’s fabrications over Quigley/NBNCo’s actuals? FTTP was occuring yes it was behind somewhat but it was happening – FTTN isn’t.

            Which leads me to you ignoring my last paragraph (as you did my previous questions asked about 4 times previously) in relation to the cost blow outs of MTM, hold ups and lo and behold, a new report just yesterday clearly suggesting the copper (which you’ll remember me bringing to your attention – for you to simply brush years ago – i.e. Telstra admitting the copper was 5 minutes to midnight and in need of replacement in 2003) suggesting that the copper’s usability is now being seriously questioned *sigh*

            Wow they finally realize 12 years later that, hey maybe as Telstra said, the copper isn’t so good after all (lol). Yes your boys are really switched on.

            Let’s face it Richard, all BS aside, the only thing Turnbull & Co have actually been right about is the “fraudband” moniker.

          • @derek the figures are capex (CP16 p66), don’t include opex which are accounted for separately. This is basic stuff.

            @rizz FTTH figures are from historical experience. NBNCo has now run fibre to 700k brownfield, 189k greenfield (CP16 p60). They disprove Quigley et al forecasts even though fibre deployment today is using savings identified in the strategic review (scenario 2). Fibre delivery is today faster (premises passed and/or activated per month), design and deployment method used cheaper (at the expense of redundancy) than anytime in NBNCo history yet costs are exploding.

            NBNCo continues to reduce FTTH footprint to reduce costs, anticipated Cost Per Premise (CPP) by technology are detailed CP16 p66.

            Your turn, show me any figures that demonstrate CPP used by Quigley were reflected in actual, that deployment was on schedule, or revenue as projected. NBNCo was founded in Apr 2009, there’s plenty of data available. “So, if you have proof present it or retract?”. Derek can show where corp plans are externally audited, Jason the imaginary NZ CBA.

            NB CP are not CBAs, ‘B’ never ignored, accounting and financials are not about the vibe, move to copper wires didn’t require overbuilding existing iron…

          • Richard…

            Please supply “proof/verification”, not yet another of your always partial (you said you could have written Mal’s plan, so…) “opinion” of the Quigley Corporate Plan, based around your own Turnbulle-sque, blind bean counter (ill)logic.

            If in doubt, please allow me to supply the following requirements…

            Proof: “evidence or argument establishing a fact or the truth of a statement”.

            Verification: “the process of establishing the truth, accuracy, or validity of something.”

            I’ll also add that “more” of the below is “not” what is required…

            Opinion: “a view or judgement formed about something, not necessarily based on fact or knowledge.

            Thank you.

          • @rizz NBNCO’s weekly progress reports, corporate plans (CP) and annual reports (AR) and the strategic review (SR) are not my opinion.

            Estimates are forward looking (educated guesses), actuals are historical. Déjà vu, you continue to believe they carry the same weight.

            That you fail to comprehend the information presented, or that the data is from the company itself. I’m sorry but is not something I’m able to address.

          • Stop the BS and pedantics Richard…

            Even the Vertigan report (at a cost of $1.45m BTW) … with all of those outspoken anti-FTTP people onboard (mentioned as such, in the parliamentary business report I linked to below – see it not that hard to supply info, not just opinions) found that FttP would cost $35.3B as opposed to NBNCo’s claims of $30.6B…

            Hardly a compelling difference considering the make-up of the review committee and something only the most biased and/or pedantic would argue over, even if they consider the Vertigan report the gospel doc.

            So believe who you will, but the crux is, regardless who you believe the Coalition’s pro bono puppet Ergas (who was so good at what he did he went out of business) or Quigley a man who came out of retirement to help build Australia’s greatest ever construction and donated his first years salary entirely to charity) they were all in the ball park of clearly suggesting that FTTP was on budget…

            http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/National_Broadband_Network/NBN/Second%20Interim%20Report/c04

            So play your biased bean counter games, to desperately try to justify a totally inferior product to Australians to suit your ideological impediment if you must and continue to massage figures as you continually feel compelled to.

            Also feel free to also use the Vertigan findings re:FTTN and by doing so, instead of deflecting from the now to the past, as drone has alluded to a number of times, you will finally start to address the topic. Which to remind you is…

            …”a massive blow out to the MTM budget, not foreseen or addressed in any report which, along with another report stating the copper is, to be blunt, fucked, shows that whilst FttP is “universally” (there’s that word again) recognised as being on target by all but dumb politicians and their equally dumb foot soldiers at blogs like this, the MTM (more commonly referred to by me and you as Richard’s plan) has been shown as either completely incompetent, mismanaged, naive, just plain fucking stupid or all of the aforementioned.

          • @derek they don’t, read the page number provided it’s clearly titled. Lease payment are separated (to allow for direct comparison with former methodology). Your link says the same thing.

            Quigley cost never approach $2400. Your link supporting FTTH costs fell after the management changes implemented by Turnbull.

            @rizz The CBA was produced using the numbers provided by the company, and therefore show the same value. Surprise! However these values we now know to be untrue (what you’ve been attacking), costs blowing out. I feel we’ve been here before.

            “Consistent with the NBN Co Strategic Reviews of the fixed and wireless networks undertaken by NBN Co in 2013 and 2014, from which the data on costs are derived, the evaluation covers the period to 2040 but imputes a residual value to any publicly funded assets in place at the period’s end.”

            An updated CBA performed today with the latest numbers would be devastating across all scenarios. Please learn about the preparation of these report and what they show. These are not “pedantics”.

          • Whatever Richard, one can only bang ones head against the rad con brick wall for so long (and as Derek alluded to – play chess with with a pigeon)… *phew*

            So to the present and the actual topic… sans your Quigley hatred…

            $15B blow out to your plan…… ?????

            Awaiting lame excuse….. now.

          • BTW Richard, you will note that unlike you (even though I have asked and asked but yet you have refused “or are simply are unable”) I supplied “verification” to my comment…by supplying a link/URL to a reputable source, verifying my comment.

            Please feel free to do likewise, “even only once”…unless you are still or typically, unable… thank you.

          • Richard,

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

            Stop. Please stop, FFS.

        • Further, I personally believe that it was political, rather than Financial or Technical decisions that lead to this path.

          I personally believe you have a point :-)

          • Hc 38% FTTB + FTTN, I didn’t know you were still fighting for FTTB. Guess back to service class zero for MDU.

            The corp plan 16 revised the FTTP costs, $30b more than MTM.

          • Sorry but if the incompetents at GimpCo refuse to divorce FttB from FttN numbers then I have no choice but to use that WHOLE number (which is 38%), as should you. You should at the very least refer to that figure and use “FttN/B” rather than “FttN” in your comments as it is misleading to do otherwise.

            I’ve never had an issue with FttB and you wont find a comment anywhere of mine that shows I ever did. What I do have an issue with is incompetents referring to FttB as FttN for political reasons (as is the case with GimpCo) So don’t even try to misrepresent my position on this. It wont work.

          • @HC A column titled “FTTN/B” (CP16 p39) you read as “FTTN only”.

            Figures (especially financials) should provide much greater breakdown; at least the cost centres of transit network, satellite, fixed wireless, HFC, FTTN & FTTB and corp expenses seperate.

          • GimpCo are lumping them together but my comment doesn’t allude to how I read it at all. But ok, let’s play it your way then Richard.

            A column titled “FTTN/B” with a 38% figure you read as 30% FttN and 8% FttB.

            Where are you getting these numbers from? How are you extracting 30% from that number for FttN and logically 8% for FttB?

          • @HC I simply subtracted the MDU ~1 million premises (8.4%) in the SR13 (agrees with 30% of FTTH premises popularly quoted).

            Are we happy with 30% FTTN?

          • Sure, I’m happy to use that figure. I’m not happy how the information is presented in the corporate plan but that is a whole other issue.

      • “Quigley continued to state publicly “on time and budget” when it was clearly untrue.”

        “Clearly untrue” is pretty well everything the LNP did after they won the election (they only stuck to two promises from the dozens they spewed out). That’s why anyone that believes the LNP numbers, over those of an honest businessman like Quigley is a fool.

        • Yeah it would be nice if someone who actually thinks Quigley was lying to produce some actual evidence of it.

          The original NBN wasn’t going uberly well hence the year on year adjustments to the plans but at least they were vastly more accurate and this latest $15 billion discrepancy!

          • The per premises costs are now known. Failure to meet their own delivery targets by a massive margin. Service class zero premises 1/3rd of premises passed. Yet they still squeal Quigley.

          • As opposed to MTM which has achieved absolutely SFA in 2 years (not just a bit behind).
            2016 targets now back to 2020 and…
            Costs blown out by another $15B on top of other blow outs (or blown out totally to $70B if you believe Joe).
            But yet you whine about FTTP being somewhat behind their own targets and say nothing (conveniently until today) about the MTM plan ..?
            Seems reality and the fact we were right about FttP and MTM is a tad hard to swallow eh?

  3. Is it something to do with Telstra? New deal, refurnishing the old copper, upgrading HFC etc?

  4. Allow me to be less than diplomatic. The fault lies squarely with the current NBN management. The fault lies with Turnbull. The fault lies with the coalition.

    Had they stuck with the proper NBN plan they could get a free pass and blame the former NBN management or Labor. But they didn’t, they decided the best thing to do would be to try and load a freight train while it was moving, derailing it in the process and then blaming the engineer for the accident and the expense to fix everything including getting the freight to point B.

    Don’t forget these supreme imbeciles took a plan to the last election that they claimed was fully costed and would delver 25mbps to everyone in 2016 at a much lower cost. Pathetic.

    • Btw, we need a Royal Commission to expose the blatant lies and fabrications from TurnBull and his Cronies!

      Frankly there is tons of evidence they’ve created to hang themselves with, starting @ “our FTTN plan is fully costed and ready to go”!

    • So not only do we have a massive cost blowout under #FraudBand, but we have a massive cost blowout DESPITE the Libs cutting NBN Co’s contingency down from 20% to 10%*!

      Now this really is a special kind of Charlie Foxtrox and all on TurnBULL’s watch!!!

      *see page 68

  5. I think ive got a few ideas. We’ve been waiting over 6 months since we signed an order form to have the NBN installed in our Tasmanian office. Been going back and forth between NBN and Telstra with NBNCo saying that the line wasnt installed correctly (took 4 of them standing around for 3 hours to work this out). Poor communication from NBNCo (cant even get a callback from our case manager) and they generally dont seem to know whats going on yet be able to provide a clear plan of how to install some CAT6 from the box in the street. Surely it cant be that hard – taken them 2 months to ‘devise a plan’. So thats 6 motnhs without getting any income from us as well as whatever they have spent having people lurk around for hours to not come up with solutions. Multiplied by however many times this is no doubt happening them across the nation and you get a whole lot of people all spinning heels Utopia like……..

  6. At least 1 billion dollars of that 15 billion went on the issue of the Fixed Wireless Towers.

    In the Fixed Wireless Review NBN Co advised the towers were only servicing 20% premises per tower.

    How could Ericsson get the required number of towers so wrong? 100% wrong?

    When contacted about the governments decision to double the number of towers – the Department said the extra 1 billion, plus the extra sum required to manage them, would come out of the existing budget.

    They intentionally lied to the public. As for the rest of the blow out – when 40% of NBN staff earn over $200,000 – the largesse of open access to public funds always results in blowout.

  7. In Joe Hockey’s first budget everyone (well anyone that knew something was up) was watching for the Aussie Infrastructure Bonds in the Budget – an innovative way for the public to see exactly how much money was allocated to the bond issue for NBN.

    At the last minute, the budget pooled Aussie Infrastructure Bonds into the main pool – no more being able to identify money attributed to NBN.

    Cover-up? The Australian Office of Financial Management was contacted about why they were instructed to pool the bonds.

    “No comment”

  8. “I am writing to Federal Auditor-General Grant Hehir to request that his office undertake an audit of the NBN company’s cost”
    Thanks Renai, most definitely time for one.

  9. Thank you Renai. Is there anything we as concerned citizens can do to assist this process?

      • Is it possible to get details of the proper channels to contact said people through?

        I’m also thinking written correspondence as I doubt an email will have much impact.

  10. Peak funding figures blow out not just because costs go up, but also if revenue costs are down. If uptake of a service is slower than anticipated then this constrains revenue and more funding is required to keep the service afloat. It doesn’t mean that costs have blown out (although it could). It doesn’t mean that long term costs have increased (although it could). There’s so many different ways to analyse costs for enormous projects like this that its almost pointless to try and analyse the figures yourself. You need the accounting firms that have been involved to analyse and compare to previous benchmarks & then to interpret the results for us.

  12. Let us know Renai if there’s anything we can help with in pestering folk. Its about time some of this Political flim flam was taken to task over playing monopoly with tax payer funds!

    1 Chopper ride gets so much attention but a $15billion blowout ‘out of the blue’ is just carpet material. As you say … no more enough is enough!

  13. “It is the job of journalists to seek objective truth and determine facts so that the public can be informed about the activities of those who hold power over them.”
    Careful! If they choose to label the blow-out as related to a security measure, they’ll probably want to gaol you, too.

  14. Who else has noticed the disappearing act of Simon Hackett from anything NBN-related? As far as I can tell, he’s made no public statements on the NBN since the start of 2015, apart from a short tweet war back in July. His absence from his usual haunt on whirlpool.net.au combined with a somewhat, ‘Look over there’ attitude of talking about anything BUT the NBN seems rather worrying considering he said he joined NBN Co to make the whole thing, ‘Less worse’ than it was before. If this was in any way being achieved, I’d expect some sort of ‘Happy days are coming’ from him.

    • He is a board member of NBN Co (I can’t do lowercase and not have the co).

      Part of being a board member is to keep such issues and comments about them internal, afaik he’s doing the best he can to make sure Australians at least get some form of improvement out of this. I’d wager if he didn’t feel he was being somewhat effective he would have left before now.

      Also one doesn’t complain in public if ones job revolves around fixing said issues (or being able to directly influence those that are responsible) and definitely not as a board member. I’d pretty much bet the complaints he’d have before on blogs and whirlpool will now be simply as minutes from board meetings and the like ;)

  16. Yes I agree with Renai, although I think a Royal Commission is the only way to resolve this mess.

    As Turnball has stated, ‘The end game is fibre’ the difference between the two builds is MK1 (NBNCo) had one stage mostly fibre, Mk2 (NBN) two stages, a mix of technologies, then fibre (although the cost of the second stage in MK2 is never mentioned nor any time frames.
    So if Fibre is the end game as Turnbull has stated how can it be cheaper, sooner and faster if you do it in two stages instead of one. Turnbulls logic doesn’t stack up or am I missing something. If you do it in two stages…..
    It can’t be Cheater but it can only be more expensive
    It can’t be Sooner but it can only be longer
    It can’t be Faster it can only be slower

    “Curiouser and curiouser!” cried Alice

    • At risk of looking like a broken record:

      +1 I think we need to push this idea fairly hard – frankly the behaviour of TurnBull et al in this has been utterly disgusting and imo a pure demonstrable Fraud has been perpetrated on the Australian Nation!

      • This is something I have asked repeatedly. The handling of NBN under Turnbull has been transparently corrupt. There’s no rational reason for any of the changes made since the election. There is only additional cost, additional time, additional complexity. For the same stated end goal. It simply doesn’t add up.

  17. I haven’t read all the comments and just browsed the article so excuse me if I am being ignorant, but, Alan Kohler did an interview with the head of the NBN, on the ABC website somewhere, and he admits that the fttn is a lot cheaper to set up, but a big point to consider is the maintenance of the copper network versus the NBN fibre. Over time, and I am talking many years, the cost of maintaining the copper is far far more expensive.

    • the thing is it’s not cheaper to setup IF your goal is to provide 100/40mbps – if your goal is 25/1mbps to all then yes its slightly cheaper as you need less nodes …. however, you are stuck at those speeds and to upgrade in 5-10 years time is going to be very expensive. You might as well deploy FTTP in the first place and save yourself a lot of money in the long run (especially in running costs and future upgrades).

  18. They are doing it on the fly of course. They won the election and did the job to kill fibre for Murdoch. Their job is done.

    What do you expect to happen when you privatise Telstra !

Comments are closed.