Telstra not essential for success for Australia's national broadband network
Posted in: Government & Policy at 07/05/2010 15:20
The federal government's new national broadband network will be commercially viable without Telstra's involvement, but taxpayers will have to fork out $26 billion over the next seven years to fund it.
An implementation study of the project, released yesterday, has found there would be no financial return on that investment for 15 years.
To read this report in The Australian in full, see:
Stephen Conroy optimistic on Telstra national broadband network deal
Communications Minister Stephen Conroy is optimistic a deal can be reached with Telstra that would slash the cost of the national broadband network.
"We've said from day one... this can be built cheaper and faster if we reach an agreement with Telstra. There's no question about that," Senator Conroy told ABC radio this morning.
NBN can be built without Telstra, study finds
A national high-speed broadband network can be built without Telstra's involvement and delivered to consumers at lower prices than many are paying today, a study has found.
In a major boost for the federal government, the study found that the National Broadband Network (NBN) could be connected to more homes than initially planned for a price tag close to its proposed $43 billion.
Most internet users would prefer slower, cheaper plans
Only a small number of internet users look like taking up Kevin Rudd's $43 billion promise of a 100-megabit-per-second broadband service when the network gets up and running.
The implementation study for the national broadband network, released yesterday, assumes only a small number of customers will opt for the full 100Mbps plan, with most choosing cheaper and slower plans, at least initially.
A gold star for broadband effort, now to deliver
After a bad few weeks at the office, the government was mightily pleased with itself for producing a worthy-looking tome suggesting it could do what it said it would do, and possibly better, on broadband.
The alternative would not have been pretty - not with the wreckage of various failed policies still cluttering the pre-election landscape.
NBN study highlights IPTV hurdles
The federal government has been advised to prepare the national broadband network to carry wholesale next-generation video services but remain cautious about expecting radical improvements in pay-TV competition without regulatory change.
The $25 million NBN implementation study released yesterday found that while wholesale video services were likely to encourage niche services, "content bottlenecks" would discourage investment in full-featured IPTV platforms.
NBN good for most, not Opposition
The National Broadband Network implementation study has been welcomed by ISPs and industry experts but for the Opposition it is still a "risky adventure with taxpayers' money", and should not be built.
The Rudd Government released a $25million report into the NBN's implementation yesterday. Undertaken by McKinsey and KPMG, the report rubber-stamped the government's plan for the fibre network and its parent company, the NBN Co.
LTE, WiMAX unlikely to find a future in the NBN
Fourth-generation wireless technologies Long Term Evolution (LTE) and the more widely known WiMAX are unlikely to play a part in delivering the National Broadband Network.
Both the NBN Implementation Study and NBN Co chief executive officer Mike Quigley have established that the technologies do not have the capacity, range and bandwidth sufficient to serve the Government's mandated speeds to regional Australian premises.
Landmark Study confirms NBN vision is achievable and affordable [news release]
The Rudd Government today released the National Broadband Network (NBN) Implementation Study which confirms that high-speed broadband for all Australians is achievable, and can be built on a financially viable basis with affordable prices for consumers.
The comprehensive report was prepared by McKinsey & Company and KPMG, and has 84 recommendations for the Government about the NBN. These cover the technology, financing, ownership, policy framework, and market structure of this important infrastructure project.
Minister for Broadband, Communications and the Digital Economy, Stephen Conroy said:
"After months of detailed and rigorous analysis, the Implementation Study confirms that the Government's National Broadband Network is achievable, viable and will transform life and business in Australia."
The Implementation Study also confirms that while infrastructure sharing and other commercial arrangements with existing telecommunications companies can benefit the project, the NBN will be financially viable even without the participation of Telstra.
Key findings and recommendations from the Implementation Study include:
- The NBN will deliver world class broadband infrastructure to all Australians;
- The $43 billion total capital cost of the NBN is a conservative estimate and there are opportunities to significantly reduce the build cost;
- The peak investment required by Government is estimated at $26 billion by the end of year 7, of which $18.3 billion will be required over the next four years;
- Government should retain full ownership of the NBN until the roll out is complete to ensure that its policy objectives are met - including its competition objectives;
- The fibre component of the NBN should be extended from 90 to 93 per cent and cover the 1.3 million new premises expected to be built by 2017-18;
- Entry level wholesale prices on the fibre should be set at around $30-35 per month for basic broadband 20Mbps plus voice service, to drive affordable retail prices and better value for money for consumers compared to what is available today;
- Fibre to the premise is widely accepted as the optimal future proof technology with wireless broadband a complementary rather than a substitute technology;
- Next generation wireless and satellite services will deliver peak speeds of at least 12 Mbps (and much higher for many wireless users). Satellite services will deliver average data rates which are more than 20 times higher than most users of these technologies experience today and much higher than average DSL usage today;
- NBN Co can build a strong and financially viable business case with the Study estimating it will be earnings positive by year six and able to pay significant distributions on its equity following completion of the rollout; and
- The Government can expect a return on its equity investment sufficient to fully cover its cost of funds.
"The Study released today is the result of seven months of detailed work and comprehensive consultation with over 140 industry stakeholders," Senator Conroy said.
"The Implementation Study team also worked closely and in a complementary way with NBN Co in preparation of this report.
"The Study confirms that the NBN can provide consumers with faster speeds and better download limits for comparable prices to what they pay in the market today.
"The Study confirms that the NBN business model establishes that taxpayers are paid back their investment with a modest return by year 15 of the project on the basis that privatisation is completed.
"Twelve months ago, the Government committed to investing in a $43 billion NBN. The Study confirms that the company will generate sufficient earnings by the end of year 7 so that the Government's recommended investment peaks at $26 billion.
"The Study also confirms the Government's decision to focus on fibre as the far superior, future proof technology for delivering high speed broadband."
The Government invites key stakeholders and the general public to provide their views on the Implementation Study to the Department of Broadband, Communications and the Digital Economy by 27 May 2010.
Senator Conroy said: "The Government will carefully consider the recommendations and feedback before we make final decisions which are critical for Australia's long term national interest."
The Government will make appropriate provision for the project in the 2010-11 Budget.
The Minister for Finance and Deregulation, Lindsay Tanner said: "Delivering the NBN will help kick start a revival in Australia's productivity growth, which has deteriorated in recent years."
The full Implementation Study, together with details on the public consultation process, is available online.
National Broadband Network Implementation Study
On 6 May 2010 the Australian Government released the National Broadband Network Implementation Study. The Implementation Study examines the Government's coverage, commerciality and competition objectives as well as the detailed operating arrangements of NBN Co Limited, its ownership and structure, ways to attract private sector investment and longer term privatisation.
The Government is currently considering the Implementation Study and its recommendations. Interested parties are invited to provide comments or submissions on the Implementation Study and its recommendations.
Please provide comments via the NBN Implementation Study wiki, via email to NBNImplementationStudy@dbcde.gov.au or by post to NBN Implementation Study, GPO Box 2154, Canberra ACT, 2601. It may not be possible to consider comments received after 27 May 2010.
On the NBN Implementation Study wiki you can make comments on each recommendation as a registered user or anonymously. Please read the instructions on the wiki home page before making a comment.