Published on the 27/08/2015 | Written by Beverley Head
The national broadband network could cost $15 billion more than was originally anticipated – but the Government claims it’s still cheaper than Labor’s original plan…
NBN this week released its annual report and its latest corporate plan detailing progress so far and future plans for Australia’s broadband network.
According to the organisation by 2018, 9 million Australian homes and businesses should be able to sign up for the network, and it expects more than 4 million will have done so. It will require a fast ramp up as in its most recent progress update NBN said the network was being being used by 526,000-plus homes and businesses – a significant jump on the 326,000 users at the start of the year, but well shy of its 2018 targets.
Achieving the plan will however be costly and there has been a $15 billion blowout between the cost estimates in the 2015 corporate plan and those in the 2016 plan. The current estimate is that the network could cost $56 billion.
The company won’t however be able to go cap in hand to the Government to fund the shortfall as it has capped its equity stake at $29.5 billion, meaning that to complete the plan the company will have to secure debt funding of up to $26.5 billion.
Both NBN and the communications minister Malcolm Turnbull maintain that although the costs are higher than anticipated, the mixed technology network being built will still cost $30 billion less than the fibre to the premises network planned by the Labor Government, and be delivered at least six years earlier.
In a lengthy blog Turnbull said that the additional costs now crystallised in the corporate plan did not represent a blow out – rather they reflected a more accurate estimate of costs based on more detailed understanding of the project.
However analysts have questioned whether Australians are getting value for money.
According to telecommunications analyst Paul Budde: “The real problem is that it still will only deliver a second-rate network – and this at a time when other countries are rolling out FttH (fibre to the home). In Singapore 75 per cent of users are already connected to FttH; and countries such as South Korea, Japan, Sweden, the Gulf States, Estonia and others are not far behind them
“My real problem is not the delay and the higher costs, but the fact that for all of that we get a network that will not deliver us the capacity and quality needed to build a modern economy and society.”
