[LINK] NBN costs & returns

[stephen at melbpc.org.au]

Cost of broadband network much less than $43b, says executive Lenore 

Taylor NATIONAL AFFAIRS CORRESPONDENT November 20, 2010 
<http://www.smh.com.au/technology/technology-news/cost-of-broadband-
network-much-less-than-43b-says-executive-20101119-180z4.html>


THE national broadband network will cost "substantially" less to build 
than the $43 billion originally estimated, and the amount it charges for 
high-speed internet will reduce over time, the chief executive of NBN Co, 
Mike Quigley, has revealed as part of the government's pitch to convince 
senators Nick Xenophon and Steven Fielding to pass critical legislation 
without seeing the company's business plan.

Senator Xenophon said the government's refusal to release the plan, which 
it has already received, was "pissing off" the senators whose votes it 
desperately needed.

Late yesterday the government released a letter from Mr Quigley 
explaining why the business plan could not be provided before Parliament 
rises on Thursday, and outlining what the senators will be told in 
private briefings with the government next week.

Mr Quigley said a crucial November 30 decision from the Australian 
Competition and Consumer Commission about where internet retailers 
can "plug in" to the network - and government decisions that would be 
based on that finding - would have a big impact on the business plan.

"Highly sensitive and commercial in-confidence" information in the plan 
would be of "commercial significance" to large purchases that NBN Co was 
negotiating, he said.

But he has outlined "general points" from the business plan in the letter 
to the Communications Minister, Stephen Conroy, and the Finance Minister, 
Penny Wong.

He said the network could be built for an amount "substantially below" 
the $43 billion assumed in the implementation study, mainly because the 
government had done a deal with Telstra to roll the company's existing 
infrastructure into the network.

The business plan "projects that prices will be reduced over time" and 
that the price for NBN Co's "basic offering" will be "attractive in the 
Australian broadband market place", he said.

But Mr Quigley said that despite the deal with Telstra, the amount 
required from government would be about the same as the $26 billion 
already predicted, and he suggested NBN Co would provide a rate of return 
similar to the 6 or 7 per cent predicted in the implementation study.

If the Senate does not pass legislation in the coming week separating 
Telstra's wholesale and retail operations - a big step towards creating 
the network - Telstra and the government will not be able to finalise 
their $11 billion deal.

The Coalition has accused the government of hiding critical information 
about the network and because of the delay in releasing the business 
plan, the crossbench senators are reconsidering a Coalition attempt to 
refer the whole project to the Productivity Commission.

The Prime Minister, Julia Gillard, said the plan would be released in 
December, after the government sees the ACCC decision.

--

Cheers,
Stephen