Thoughts On New NBN Corporate Plan

With the release today of the Corporate Plan 2012 – 2015 for the National Broadband Network (NBN), we’ve already seen the mainstream media trumpeting of failure, and cost overruns, and delays.

This is of course not unexpected, with much of the media having it in for the project from day one.

While there has been a short – (six months) – increase in the expected rollout period of the network, and indeed some increase in cost, what the media can’t/won’t tell you is that the scope of the project has changed somewhat, due to changed conditions since the previous corporate plan was released in 2010.

When you follow through the explanations of where the increases in cost have materialised, it is quite clear that growth in the size of the network – (particularly an increase in overall fibre length) – demonstrates the reasonableness of these increases.

Of course, this won’t please everyone. These are the people who will ignore the fact that revenues are also projected to increase – so clouded has the debate over the NBN become.

However, there are a number of other interesting pieces of information that have – (so far) – jumped out at me from the corporate plan – and these definitely won’t appear in any mainstream coverage of today’s announcements.

Let’s start with this quote:

“As at 30 June 2012, 41 Access Seekers have signed NBN Co’s Wholesale Broadband Agreement (WBA), constituting over 94% of the current fixed broadband market.”

Think about that statement for a moment.

It says an amazing amount for the likely uptake of the network going forward.

Since the plan is to decommission the existing Telstra-owned copper network, and ISPs representing 94% of the fixed-line internet user base in Australia have already signed up to provide services on the NBN to their customers, we should see close to all of that 94% moving straight across from the copper network to the NBN.

Because the copper won’t be there anymore, if they want fixed-line service still, they’ll have to move. That’s a sizable and measurable metric of just how many people will be on the NBN when it is completed.

One of the bugbears of many people is that they may have to wait up to nine years before their areas is completely cutover to the NBN, that it is “taking too long”. Try this:

“NBN Co will increase construction capacity in more densely populated regions through the release and award of further construction work packages by the end of calendar 2012.”

So, before the end of the year, more contract work to actually build the network will be commissioned, meaning it can be built faster than is already planned.

Expect that when the three-year rollout plan receives its first annual revision next March, that a lot more areas will be added to the schedule for rollout than might previously have occurred.

It could also mean that areas already scheduled are accelerated – but we won’t really know until the end of the year when the new contracts are announced, and then March when the rollout plan gets updated.

Positive news, but stay tuned.

Also in respect to the pace of the rollout, NBN Co made it quite clear that their main priority at this time is the “transit network”, required to actually connect the entire network together into a cohesive system.

“NBN Co has prioritised transit connectivity to support earlier connection of greenfields estates ahead of the volume rollout. Prioritising the transit rollout also supports the rapid deployment of the fixed wireless network. The 2012-15 Corporate Plan forecasts that the transit network will be completed by the end of FY2015, with the bulk of the network in place by the end of FY2014.”

This entirely makes sense. The transit network is the foundation of the NBN, and like a house, you don’t build up until the foundations are ready.

A common complaint from the media is that too much of the contract value of the NBN is going to overseas companies, with one analysis claiming 82 cents in every dollar is going to foreign concerns.

Well, no:

“Local content was 51% of contract value as at 30 June 2012. Further future Australian construction and operations contracts are expected to increase the value and proportion of local content.”

Australian content has always been the priority, and one must remember that most networking gear is made overseas. Australia just doesn’t manufacture this kind of equipment, and this makes the current level of Australian content at 51%, mighty impressive.

Recently, I have seen people concerned that their areas that are currently earmarked for fibre – (rather than wireless or satellite) – might slip outside the fibre footprint.

Good news here too:

“NBN Co will ensure that all premises within Telstra Bands 1 and 2 are served (unless they are declared ‘frustrated’) and provide a definition of the fibre footprint.”

And finally for now, the battery backup argument.

Existing copper lines are powered with 40 volts from the local telephone exchange, and given the fibre cannot carry electricity, the NBN termination devices have to be powered at the premises. In the event of a power failure, and the NTD going down as a result, phone services cannot be provided during the failure without a battery backup unit.

The battery units to suit the NTDs are large and unsightly, and many existing users are unhappy with them. Corporate plan to the rescue again:

“The Government has consulted widely with key stakeholder groups on the extent to which NBN Co provides battery backup to different types of end-users (e.g. phone only end-users, special services and priority assist end-users). The 2012-15 Corporate Plan incorporates the Government’s policy approach that end-users will be able to nominate whether or not they want NBN Co to provide battery backup. Priority assistance households will be provided with a battery backup. It is now assumed that 50% of fibre end-users will elect not to have battery backup, with a consequent reduction in capital expenditure.”

Cost savings, and the option of still having the backup if you want it or need it – a sensible outcome to argument that has been going on for at least 12 months.

Overall, you won’t see these positive points in coverage from the major media outlets, yet they show quite clearly that progress on the build of the NBN – albeit slow on the surface – is ready to explode.

It is a shame most people won’t see them.

  • Michael Meehan

    I heart you, Mick Wyers! Thanks for giving me more ammo to take on the No-NBN Zombies 🙂

  • What else will you expected ISP’s reaction to our new wholesale broadband monopoly? Is their any other choice?

    • A new monopoly with a legislative guarantee to charge all ISPs the same amount for access? Versus what? Telstra? I’ll take the new monopoly any time.

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