It is also the case that the Heads of Agreement with Telstra both reduces the total costs of the build and provides a level of assurance to the revenue line.
So far from being a “white elephant” the NBN can provide an acceptable return for the Government. Taxpayers will get their $27 billion investment back with interest and they will get a network they can use for decades.
This is, I believe, a much better option for the Australian public than giving billions of dollars of taxpayer funding to subsidise commercial companies to marginally improve today’s broadband networks.
So what are the risks for the public in financing the NBN?
The first thing I would note is that while the NBN has the same nation-building characteristics as the Harbour Bridge or the Snowy Mountains scheme it does not have the same risk of cost over-runs.
Unlike these projects, the NBN is a scalable network. It is composed of integrated pieces which work together but which also work in their own right. There are four major components:
- The satellite solution for 3% of premises which will provide much improved broadband for more than 200k premises;
- The fixed wireless solution which will serve 4% of premises;
- The FTTP solution that serves 93% of premises; and,
- The transit backhaul network which connects the three access technologies to the common Points of Interconnect.
The satellite and fixed wireless solutions are badly needed to dramatically improve the services that can be provided to rural and remote communities.
The transit backhaul build is, I believe, supported by almost everyone in the industry as being a good investment for the country.
So the issue is around the FTTP build. One of the concerns I hear is that the costs will blow out.
We have come in on time and under budget on our first build in Tasmania and we have some excellent benchmarks for similar builds in overseas markets.
Remember this is a highly repeatable build of very similar modules as we rollout across the country. The scope for applying continuous improvement methodologies to drive down costs is huge.
The Heads of Agreement with Telstra also reduces uncertainty as we are able to use existing underground ducts. We also expect to dramatically reduce our revenue risk with the Telstra agreement to decommission the copper as our fibre network is rolled out.
The other concern I hear is that our revenues are at risk because it will be at that point that there will be a move to wireless on the assumption that wireless will provide everyone’s broadband needs.
Overseas data simply doesn’t support this line of argument. You will recall I said earlier, that some of the biggest Telcos in the world are investing in FTTP.
So there are two questions:
- 1. What is it that all these Telcos know about wireless that eludes some in Australia?
- 2. Why is it that you can’t buy anything close to a 50 GByte per month plan on a mobile network?