FTTP NBN would cost $8.5bn more, claim ‘leaked’ Govt docs


news A switch back to an all-fibre National Broadband Network would reportedly cost the Federal Government an extra $8.5 billion and potentially cause a wider Federal Budget black hole, according to a new set of documents which appear to have been leaked to the media late last week.

Neither major side of politics has yet confirmed what broadband policy they will take to the upcoming Federal Election, which Prime Minister announced yesterday would be held on 2 July.

However, late last week both Labor and the Coalition gave strong indications as to what policy they would be pursuing for the poll. Opposition Leader Bill Shorten said in his Budget Reply speech on Thursday night that Labor would deliver Australia a “first-rate Fibre NBN”, while the Government hinted in Senate Estimates hearings that same night that it would not be upgrading its own Multi-Technology Mix policy.

On Saturday morning, The Australian newspaper reported that the Australian Labor Party was facing “a financial nightmare” over its plans, due to what internal Government documents had flagged as an increased cost associated with a change to the current NBN model.

The newspaper reported (we recommend you click here for the full article) that it had obtained a set of internal documents put together by the Department of Finance that showed that the NBN was at risk under a revised Labor strategy of seeing its Internal Rate of Return drop below 2.5 percent.

This could mean that some or all of the cost of the NBN would be placed back on the Federal Budget as an expense, rather than as a capital investment, as the NBN currently sits on the Budget. The Australian put the cost at $8.5 billion, but without publishing its calculations on the issue.

The news comes as the Government itself last week warned that the NBN project may be in trouble financially.

In this week’s Federal Budget, the Government revealed it had put together a special taskforce to determine how to fund its modified rollout of the NBN, with the project’s costs ballooning and the public purse running dry of funds to support it.

The Coalition Government has maintained since the 2013 Federal Election that it would cap the public’s equity contribution to the NBN project at $29.5 billion, and that its final payment of $8.8 billion to the company would be its last.

To fund the rest of its planned rollout through to 2020, the Budget notes that the NBN company is expected to raise debt from external markets of between $16.5 billion and $26.5 billion (with a base case of $19.5 billion) to complete the rollout of its network.

However, the Budget also warned that this may not be as easy as expected, and that the Government may need to step in, either to provide “interim funding support” or to help the NBN company raise the debt itself (for example, through guaranteeing its debts).

Under sustained questioning in a Budget Estimates session last week, Finance Minister Mathias Cormann said the Government did not yet have the answers on the issue, despite having been aware of the problem for some time.

Labor’s original IRR for the NBN with its near universal Fibre to the Premises model was 7.1 percent, but that figure has sunk substantially over the past several years, as the Coalition has imposed its Multi-Technology Mix model on the project.

Opinion/analysis to follow separately.

Image credit: NBN company


  1. “..new set of documents which appear to have been leaked to the media late last week..”

    LOL, I wonder how much work was involved in putting together those documents for Turnbull and then “leaking” them.

  2. I’ll take estimates of costs – from Labour, the Coalition, or the Australian newspaper – seriously when they bet their own money on the outcome.
    For the little that it’s worth, I think a $10 billion write down of the nbn is very likely in the next few years regardless of who wins the election.

  3. So we’ve had leaks from within nbn™ for years, and they’re all about how bad the MTM model is.

    Now, on the eve of the election campaign, we miraculously have a ‘leak’ that claims FttP costs more than MTM.


    Oh, and when they did their modeling, did they forget or choose to ignore that FttP sees higher ARPU than FttN?

    Silly me, of course they didn’t forget…

    • Interesting hypothesis “Higher FTTP revenue offsets its higher CPP”, lets go to the available actuals and test it.

      ACCC’s “NBN Wholesale Market Indicators Report” provides definitive customer breakdown @ 31MAR2015:

      NBNCo’s Price List provides the definitive AVC and CVC rates:

      Note: TC-1 & TC-2 are not broken down in sufficient detail in the ACCC report, however I’ve assumed i) revenue likely to be the same across layer-1 mediums (all technically capable) and ii) revenue relatively insignificant to TC-4. It’s also assumed the demographics of the different medium customers are basically the same (metro v regional). Greater detail would afford a more accurate picture (but we use what we have).

      Using the above sources average TC-4 revenue by medium per month (AVC + CVC) can be calculated, it shows:
      FTTP $47.37
      FTTB $47.55 (+0.38%)
      FTTN $43.99 (-7.14%)
      LTE $40.19 (-15.15%)

      By comparison NBNCo’s 3Q2016 Financial Results released last Friday shows brownfield CPP as:
      FTTP $4,403
      FTTN $2,275 (-48.33%)
      LTE $3,479 (-20.98%)

      CPP of FTTP connections double FTTN, yet revenue less than 10% more. Direct OPEX calculated previously (FTTN about $100/yr more (or double FTTP)). Even before adding FTTN faster rollout (earlier revenues offsetting sunk costs) the numbers don’t support the hypothesis.

      These had been modelled previously by myself using NBNCo’s evidence to Senate Estimates showing expected future demand of various mediums, actuals surprisingly close.

      We could do the same for IRR with available information.

      Workings here:

      Increased capex alone for the remaining 8m premises of reverting to FTTP would be at least double the $8.5b given in the article. Then add increased costs due to the delays (see MTM blowouts).

      • All very good, but you assume FTTN has the same life time as FTTN. You forgot to add the extra CAPEX required in 5-10 years to replace FTTN with FTTH.

        • @d telecoms look to recover capex in 7 years.

          Whilst I reject a FTTH upgrade is inevitable (tech changes rapidly, FTTdp today’s brownfields focus) using the above figures (ex $700 lease payment) FTTN’s $1,575 could be recovered in as little as 5 years using as little as $350 of the available $520 / yr available (from just TC-4 revenue). All whilst providing for a commercial return for taxpayer’s equity.

          Taking fibre closer to the end user faster and cheaper reusing existing infrastructure. Worked in many international markets, private sector performing even better and for significantly less taxpayer money than Conroy’s folly.

          • FTTdp and FTTP can use the same infrastructure and have a relatively easy upgrade process physical line wise on the customer end. The same amount of fibre should be provisioned as it’s only the individual leadin portion at each premises which isn’t replaced, none of the infrastructure in the ground prior to that point need be any different from a full FTTP build.

            FTTN however uses a different infrastructure build entirely. Simply put the amount of fibre installed is nowhere near enough to support a switch to FTTP/FTTdp.

            Bill Morrow himself has stated in the senate hearings that to upgrade an area from FTTN to FTTP after the nodes and their infrastructure had been built out that everything installed would have to be bypassed and entirely overbuilt.

            None of it can be reused after the FAN point (and generally the backhaul from POI to FAN would also need to be upgraded).
            A FTTP or even FTTdp upgrade build has to completely rebuild the infrastructure from scratch. Nothing of a FTTN build can be reused, not the cabinets, not even the fibre – there’s nowhere near enough of it in the right configuration.

            As a basic example of this in practice – the fibre on demand product, even with only the four applications that have actually gone through have had to bypass the nodes in their areas entirely – despite soundbites in the past saying the nodes could potentially be used, in actual fact they aren’t provisioned to be able to be used for such a setup at all, and never will be.

          • @l you are wrong re FTTN > FTTP/FTTdp upgrade.

            12-core fibre is mandated in the current 192-premises FTTN setup, 4-core reserved for the 7330. The remaining 8-core are for extending fibre further towards customers ie sufficient cores to service all premises within existing GPON split ratio (32:1).

            Before anyone repeats the “no space in node cabinet” claim the optical splitters used for passive fibre extension are pit-located equipment.

            Today even less LDN fibre now proposed after the adoption of the skinny fibre model.

            Neither FTTH/FTTdp are easy. Well understood; time consuming, uses much labour, expensive. FTTdp wins between the two by not entering the customers premises. Biggest failure of the Conroy/Quigley model.

          • Are you suggesting they can depreciate FTTN over 5 years and still show a ROI during that period. I doubt it.
            OK, model the upgrade. It’s always been Turnbull’s assertion that it’s cheaper to upgrade. They didn’t do it for the CBA. You seem to like modelling, do it, since you also believe it to be the case.
            Just take it as a given an upgrade will be required. If you have been in the industry as long as you claim, you will know no one ever overestimates requirements. How’s your 1Mb prediction going?

          • @ Richard…

            “Whilst I reject a FTTH upgrade is inevitable (tech changes rapidly…)”

            Yet you support the continued usage of 1800’s copper?

            You’re welcome.

          • Richard,
            “Today even less LDN fibre now proposed after the adoption of the skinny fibre model.”
            So, you’re saying that each node cabinet won’t be provisioned with enough fibre to enable the almost mythical FoD?

          • “FTTN’s $1,575 could be recovered in as little as 5 years using as little as $350 of the available $520 / yr available”
            And then budget blowout doubled the cost of rollout, so I presume that’s then ~$700/year, so in reality only 20 years to recover.

          • @d “Are you suggesting they can depreciate FTTN over 5 years and still show a ROI during that period. I doubt it.”
            Not what’s claimed, indeed continue to maintain no model is profitable (FTTH less so). It is however as I describe.

            “You seem to like modelling, do it, since you also believe it to be the case.”
            I just did! You don’t understand it.

            “How’s your 1Mb prediction going?”
            Let’s have a link to support your claim. I call rubbish (if anything it’ll be provisioned capacity). ACCC’s NBN wholesale market report release a week ago (not reported on this site, Renai acknowledging my link) shows contracted TC-4 capacity for NBNCo’s customers @ 31MAR2016 was 952Gbps for 906k customers (or 1.05 mbps / customer).

            @tj not what’s claimed at all.

            @hotc & @rizz mindless drivel?

          • “@hotc & @rizz mindless drivel?”
            Agreed. Much of what you typed in that post was indeed.

            Don’t keep knocking others for not understanding your fanciful made up numbers when you can’t understand the actuals.

          • @ Richard…

            Yes I agree…

            Your stupid comment – where you stated “you do not support FTTP because tech changes rapidly”…(so you support copper)…

            Is indeed mindless drivel and the ultimate in laughable stupidity, rivaling even the classic “before roads there were no roads”


            You’re welcome

          • Whilst I reject a FTTH upgrade is inevitable

            Of course you would, otherwise your position is completely untenable…shame you are the only one that contends that position though, eh?

          • @r “Your stupid comment – where you stated “you do not support FTTP because tech changes rapidly”…(so you support copper)…”

            Wass that my comments? Re-read what I actually, slower.

            @tj right less fibre, where do you think I was talking about?

            @tm everyone contends FTTH is inevitable? Dozens of telcos around the world disagree but go on.

            Watch them squeal, invaluable contributions. When you don’t understand the analysis all that’s left is abuse and bile;-)

          • Richard,
            Comprehension fail, again.

            Blah blah blah abuse blah blah blah bile blah blah blah

          • Dear Richard’s ego…

            Not only comprehension fail, but denial to one’s own words/position “again”.

            Your position is and has always been to re-use the copper isn’t/hasn’t it?

            Your above comment was “Whilst I reject a FTTH upgrade is inevitable (tech changes rapidly…” wasn’t it?

            Well self proclaimed numbers guru 1 + 1 = ?

            I reiterate the stupidity of anyone saying they are against FTTH because tech changes rapidly, whilst forever supporting 1800’s copper.

            You’re welcome

          • @tm everyone contends FTTH is inevitable? Dozens of telcos around the world disagree but go on.

            nbn™ is now taking it’s orders from “dozens of telcos around the world” now?? Where did you see that??

            Last I saw, Ziggy, Morrow and even Turnbull don’t accept your position.

            Oh, and I’m not even that sure about your “dozens of telcos” supposition:


            Got anything a bit more evidence based than your opinion?

          • Well self proclaimed number guru 1 + 1 = ?

            Even a fool like you should know it’s $71bn!

          • @tm Your very link disproves your “everyone” point. Growth in Asia, where existing infrastructure is poor.

            Rizz is right though, the squealer’s ignorance is great for my ego (how dumb are they? A tag-team of drowners).

            This thread isn’t even that complicated, wait for my IRR analysis (their little pin-heads exploding;-)

          • @tm Your very link disproves your “everyone” point.

            The global growth of all fibre access network penetration has significantly increased during 2015 as global broadband subscribers reached 751 million.

            It does if you ignore the English definition of “global” I guess.

            You signed up for that adult education class yet?

          • Wow I don’t know if that was you or an 8 year old Richard, but regardless I reiterate…

            1+ 1 = $71B… straight from CP16, Henry, Richard & Co… nice work…

            Anyone who says they do not believe FTTP is the end goal but then supports 1800’s copper instead, has a real problem with actuality and intelligence …

            You’re welcome… and as you’d know by now I keep you’re welcome as a conclusion to all of the “special posters here”

            Plus I see I have dented that ego to a point where you feel as though you must mention me at posts…ROFLMFAO…

            And yet you claim some baseless superiority..

            You’re welcome again.

      • So Richard numbers man
        With the
        FTTP $47.37
        FTTB $47.55 (+0.38%)
        FTTN $43.99 (-7.14%)
        LTE $40.19 (-15.15%)

        Can you also supply the total revune of each tech. As I want to see how it compares to your averages

        • @jk another time I’ll use the revenue data to highlight it’s devastating affect on IRR.

          Funny how my positions (much abused by the squealers) are being confirmed by actuals. Then few understand any analysis. A sign of our enlightened times: mock knowledge, education and experience, (uninformed) opinion all that matters.

          Renai should have a field day with all this analysis.

      • You forgot the part where the actual CPP of FTTN = (FTTN + FTTP), since every expert (including the charlatans) agrees that FTTP is needed by 2026.

  4. Undocumented costings from all directions. Newspapers saying………. (last Federal Election Libs/Nat/Australian behaviour) the NBN/MTM is basically under performing (in every way) and costing more and more. The Liberal and Country Parties (along with pick you’re vested interest, the letter M coming to mind) have a great deal to answer for this technological and financial disaster, they have created. Immense harm to this countries future has and continues, to be done.

  5. If they were so concerned about the cost don’t blame ALP for policy, blame LNP for changing polices in the first place.

  6. A switch back to FttP costs 8.5 Billion? how much would it have cost if they had not switched to FttN and spent 2 years doing nothing except renegotiating the Telstra contract. Surely less than 8.5 and maybe 2 years longer than 2020 and it would of offered equal access to the majority of Australians regardless of where they live and would of reduced the number of people needing to access the new satellites which would of increased the lifespan of those satellites.

    Edit: Not to mention the increased revenue of faster speeds and more reliable connections, less maintenance and electricity costs over the coming decades and eventually a possible sale to get back the costs?

  7. Why are we worried about $8.5 billion more when MTM as it is has already blown out plus the money that goes into maintaining it?

    • Do it right, do it once, do it with fibre!!

      had we done this we wouldn’t have wasted 3 years and billions of dollars on MtM!

      We seriously need a Royal Commission into the Liberal destruction of the NBN!!!

  8. And it would be worth every cent.

    I can’t believe we are actually even debating this.

    Something else to note, Morrow, Fifield, Turnbull, Karina and Rue keep bleating on about meeting targets and being ahead of targets and forecasts, yet this would suggest the opposite.

    • We’ll, we all know how the LPA manages the economy, they hide their fuckups and wait till Labor get in and blame them.

      I guess NBN is just following their lead.

  9. I don’t necessarily see that it would cost all that extra. A switch back to FTTP would provide certainty for investors meaning the government wouldn’t necessarily have to foot the bill for it.

    Not to mention as has always been said that the NBN is paid for not by taxpayers but by people being forced to use it.

  10. Didn’t NBN Co say it would cost an extra $30b in their previous corporate plan?

    It really looks like NBNco may have a problem with integrity and honesty.

    • The current nbn exec team had been entirely lacking integrity and honesty from day 1!

      You only need to look at their lack of transparency, flagrant disregard for the GBE guidelines and KK’s partisan antics on Twitter to see this.

    • Their previous CP didn’t take into account the further blowout from their estimated $56b to Hockey’s confirmation of $71.6b.

  11. Didn’t see anything from The unAustralian when Malcolm switched….I guess that must have been “not a cent more”…

  12. If all it takes is an extra $8.5b to close the gap to FTTP thats an admission of what great value it would be. The utility on offer for the nation from FTTP as against FTTN is like chalk and cheese.

  13. Apart from the top of the page being emblazened with “LEAK” or “MEDIA RELEASE”, I figure out the difference at NBN. Media releases get posted to their website and emailed to journos whereas leaks only get emailed to journos.

  14. I dunno. An additional $8.5 billion sounds like a good price to get rid of the abortion that we’re now promised. As far as I can see there will be nothing salvageable from the MTM and we’ll all have to foot the bill of God on knows what to completely replace it.

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