Senate demands release of NBN FTTP analysis

The Senate has backed a motion from Labor's Stephen Conroy demanding that NBN release a number of documents including an analysis of the cost of an all-fibre rollout of the National Broadband Network.

NBN's updated corporate plan, released last month, included the results of what the document described as a "high level desktop analysis" of restarting a fibre-to-the-premises (FTTP) rollout for the network.

The company prepared the analysis at the request of the government.

Although the corporate plan acknowledged the government-backed 'multi-technology mix' (MTM) rollout was set to cost more than expected, it maintained that it was still a superior strategy.

"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," the corporate plan stated.

"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)."

Communications minister (and now prime minister) Malcolm Turnbull referred to the analysis during the launch of NBN's updated corporate plan.

"[T]he NBN Co has concluded that its peak funding requirement under the current model is between $46 and $56 billion, and their base case is $49 billion, and this is around $30 billion less than what it would cost to go down the route the Labor Party had set the company on when it was in government," Turnbull said.

"So the $30 billion differential is still there, but what is significant is that the NBN Co's conclusion is that the time difference is even greater. They estimate that if an all-fibre approach were undertaken it would take until 2026 and quite possibly 2028 to be completed. This project under the strategy the company is committed to will be completed by 2020."

At a 14 September hearing of the Senate's inquiry into the NBN rollout, NBN executives indicated they were unwilling to release the analysis used to prepare the comparison included in the corporate plan as well as the direction from the company's shareholder ministers that led to it being conducted.

NBN CFO Stephen Rue said that because the analysis was prepared using information drawn from the not-publicly-available operating plan, much of the analysis was commercial-in-confidence.

"How is it commercial-in-confidence to share with us the details of something that is no longer happening?" Conroy retorted.

"Well we are still negotiating contracts for the multi-technology mix which includes FTTP ... things like pricing arrangements [are] obviously sensitive to our RSPs and our revenue going forward," Rue said.

"So there are plenty of issues that are commercially sensitive... because it is a subset of the operating plan."

In addition to the FTTP analysis and the government direction to prepare such an analysis, the Senate motion called for minister representing the minister for communications (Senator Mitch Fifield) and/or the finance minister (Senator Mathias Cormann), to table by 3.30pm on 12 October the NBN operating plan; the financial and deployment forecasts for the multi-technology mix rollout from FY2015 to FY2022, as included in the operating plan; and NBN's 12-quarter integrated deployment plan.

Copyright © 2015 IDG Communications, Inc.

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