NBN looks beyond the National Broadband Network rollout

NBN chief executive Bill Morrow today laid out some of the government-owned company’s key forecasts through to 2021: A key date for NBN as it completes the transition from overseeing network construction to focusing on its future as a network wholesaler.

Morrow along communications minister Senator Mitch Fifield today launched NBN’s latest corporate plan, which outlines its projections from 2018 through to 2020 mdash; the year the network build is expected to be completed mdash; and 2021.

In FY21 NBN expects its revenue to hit $5.4 billion mdash; up from just over $1 billion in FY17. The company expects 8.1 million premises to have active NBN services in FY20, growing to 8.6 million in FY21.

FY21 is the first year that NBN expects to be cash-flow positive, delivering a return of $100 million.

“This is a commercially viable model,” Morrow said today. NBN will not rely on one-off taxpayer subsidies, the CEO said.

“It is a model that actually generates enough margin, although modest, in our easy to deploy areas to offset the losses that we see in the remote parts of the country,” he added (though the government is seeking to implement a regional broadband subsidy scheme).

Morrow said today that NBN is still aiming for peak funding for the rollout to not exceed $49 billion, and that the company’s experience so far had allowed it to further narrow the projected funding range.

NBN’s first corporate plan after the government mandated a switch away from an all-fibre build to a ‘multi-technology mix’ (MTM) approach, released in August 2015, said the company expected the rollout to cost between $46 billion and $56 billion, with the company's management aiming for $49 billion.

(The government-commissioned NBN strategic review carried out after the Coalition was elected in 2013 estimated an MTM rollout would cost only $41 billion. The Coalition indicated before the 2013 election that it could deliver the network for $29.5 billion in public funding; although the government has capped equity funding at that amount it has also loaned NBN money to complete the rollout.)

NBN in August last year released an update to its corporate plan that said although the company still expected peak funding for the rollout to be $49 billion, ­the worst case scenario had been revised downwards to $54 billion.

The document released today said the company is still working with a peak funding base case forecast of $49 billion, with a tightened range of $47 billion to $51 billion.

“While FY17 performance has provided nbn with more data to improve forecast accuracy and therefore narrow its peak funding range, uncertainty still remains in the context of the scale and complexity of the final network build and activation, and the changing market environment,” the document states.

Forty-six retail service providers (RSPs) have directly signed agreements with NBN to sell National Broadband Network services, Morrow said today. However, there are more than a hundred resellers that are on-selling NBN services.

“All up, we figure there’s about 180 different brands that are selling into the country today,” Morrow said. That’s “great news” the CEO said, though he reiterated previous comments that the number of retailers has created “a little bit of a land grab phenomenon, where there are elements and signs of a price war.”

“On one hand that’s good for consumers there’s no doubt about that mdash; you keep prices down very low mdash; on the other hand we’re missing opportunities to actually truly tailor our products and services to the end user needs,” he said.

Morrow has argued that the push by a large number of retailers to build early market share on the National Broadband Network has meant many are pushing low-speed plans and/or under-purchasing capacity, leading to a poor end user experience.

Morrow acknowledged “confusion” for end users caused by the complex web of responsibilities between NBN and RSPs, particularly when it comes to migrating to the new network. The government earlier this month said that NBN and industry representatives had committed to tackling key migration issues faced by consumers “including confusing information, handballing customer complaints, lead times for connections and rescheduled appointments”.

Rollout complete by 2020

The “bottom line”, Morrow said today, is that NBN is will complete the network rollout by 2020, with 11.6 million homes able to order a service by the end of FY20. That number represents a 300,000 decrease on the previous corporate plan, which NBN has said is a product of there being fewer homes in Australia than indicated by datasets it was previously working with for forecasts.

“The fact is we have half of the nation now built, we have walked those streets, we have seen those addresses and we hellip; now have the evidence that says there are fewer homes in those areas than what those databases have suggested,” Morrow said. However, he added a note of caution that the figure is still a forecast mdash; there company may find there are even fewer or more homes as the rollout continues.

The corporate plan also adjusts some of NBN's projected ready for service figures across FY18 and FY19. In FY18 it is now projecting 8.7 million homes RFS, compared to 9.1 million in the previous plan. The change is partly attributable to 200,000 premises not actually existing in areas where the rollout has begun; in addition, 200,000 homes were shifted from FY18 to FY19 because they are now slated to receive fibre to the curb (FTTC) connections, which can take longer to roll out than fibre to the node (FTTN) or hybrid fibre-coaxial (HFC).


Copyright © 2017 IDG Communications, Inc.

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