Government releases NBN plan

20 December, 2010 by IF

Press Releases from the Federal Government

The Gillard Government today released NBN Co Limited’s Corporate Plan, which shows the National Broadband Network (NBN) will provide all Australians with world-class broadband on a financially viable basis at affordable prices.


The Corporate Plan shows taxpayers will get their investment back, with interest; the NBN will provide a rate of return significantly higher than the government bond rate; and all Australians will gain access to this state-of-the-art network.

The plan provides a range of detailed information on the rollout and costings of this important project including:

* NBN Co’s expected rate of return is 7.04 per cent, which compares favourably with the average 10 year bond rate (July 2009 to November 2010) of 5.39 per cent. The NBN Corporate Plan shows the Government can expect to recover all its funding costs with interest.
* There will be uniform national wholesale prices across NBN Co’s network which will provide a foundation for retail prices that will be both affordable and competitive.
* By June 2013, NBN Co is expected to have passed 1.7 million premises.
* As a wholly owned Commonwealth company, the Government will have overall control of the project during rollout and the flexibility to ensure outcomes are optimised for all Australians
* The total capital expenditure for the project is estimated to be $35.9 billion
* The Government expects to contribute $27.5 billion in equity for the rollout.

NBN Co will provide uniform national wholesale prices, with an access price for its basic service of 12mbps / 1 mbps across all technologies starting at $24 per month. The Government expects this will translate into retail prices that will be both affordable and very competitive.

NBN Co will also offer a range of wholesale pricing options, providing retailers with maximum flexibility to tailor their services to customers.

The Corporate Plan has been adjusted in recent weeks to take account of the Government’s response to the NBN Implementation Study, including the decision regarding the Points of Interconnect (POI) to the network that was informed by advice from the Australian Competition and Consumer Commission (ACCC).

The ACCC has advised that a semi-distributed network design would be the best outcome for competition and in the long-term interests of end users. Uniform wholesale prices can still be delivered under a semi-distributed POI approach.

The ACCC will closely monitor the level of competition on backhaul routes and address any failure in these markets to deliver competitive outcomes by using its new upfront price determination powers where needed.

Based on the ACCC’s advice, NBN Co’s internal rate of return has not been materially affected by the decision on POIs, as these changes mean that regional take-up is not likely to be significantly affected.

A key assumption of the Corporate Plan is the finalisation of the Definitive Agreements between NBN Co and Telstra.

The Government recognises that Telstra’s participation in the rollout of the NBN represents a major transaction delivering significant micro-economic reform.

Corporate Plans for Government Business Enterprises are not usually released to the public, however, the Government is keen to ensure Australians are provided with as much detail as possible on the nation’s largest infrastructure project.

In releasing the public version of NBN Co’s Corporate Plan, the Government has set the stage for significant advances on the NBN rollout in 2011.

Ubiquitous high-speed broadband is vital to productivity, jobs and long-term growth, and has the power to transform and strengthen Australia’s economy.

The NBN will deliver benefits, including improved delivery of healthcare and education, for all Australians, no matter where they live.

NBN Co’s Corporate Plan is available at:

The Gillard Government today released a statement that sets out its expectations of NBN Co as it rolls out the National Broadband Network (NBN).

The Statement of Expectations also comprises the Government’s final response to the Implementation Study, which was publicly released on 6 May 2010.

The Minister for Broadband, Communications and the Digital Economy Senator Stephen Conroy said the Statement of Expectations puts in place the final pieces of how the NBN will be implemented.

“Today represents another significant milestone in the delivery of the NBN and it means we can get on with delivering Australia’s largest nation-building project in our history,” Senator Conroy said.

Statement of Expectations:

The Statement of Expectations provides NBN Co with the Government’s policy implementation objectives for the NBN.

The Statement covers the Government’s expectations in relation to, among other things, coverage and premises to be served, NBN Co’s role in new developments, the legislative and regulatory framework, ownership arrangements, funding, planning, reporting and performance management.

Some of the most important decisions recently finalised were on the number and locations of the Points of Interconnect (POIs) to the NBN, and on battery back-up arrangements.

The ACCC advised the Government that a semi-distributed network design, where the NBN will extend to meet, but not overbuild competitive backhaul routes, would be the best outcome for competition and in the long-term interests of end users. This approach was generally supported by industry in consultations with the ACCC.

The Government has accepted the ACCC’s advice and as a result, NBN Co will establish approximately 120 POIs: 80 in metropolitan Australia and 40 in regional Australia.
The ACCC will closely monitor the level of competition on backhaul routes and address any failure in these markets to deliver competitive outcomes by using its new upfront price determination powers where needed.

The Government expects this approach will deliver a uniform national wholesale pricing outcome and support retailers’ ability to offer uniform prices at the retail level.

The Government intends to undertake consultation with stakeholders, including emergency services, on the appropriate way of ensuring access to battery back-up services for those who need them.

The Government has indicated that in the interim it expects NBN Co to provide battery back-up to all premises in the fibre footprint to ensure a standard telephone will continue to provide voice services during blackouts.

The Statement also outlines key decisions in relation to NBN Co’s role in transforming the industry structure. To ensure NBN Co operates on a level regulatory playing field the Government will be making an amendment to the Telecommunications Legislation Amendment (National Broadband Network Measures – Access Arrangements) Bill 2010.

This will require new fibre networks built after 1 January 2011 for residential and small business purposes to be wholesale-only as well as offering a Layer 2 service on an open-access basis. The Government will consult with industry in finalising the detail of such an amendment.

NBN Co will retain the option of overbuilding infrastructure built after 1 January 2011. The Government has also already indicated it will consider the introduction of a levy, if necessary, to prevent opportunistic cherry picking.

The statement also outlines that in consultation with NBN Co, industry and community, the Government will explore practical legislative options that support the NBN rollout, including changes to the Telecommunications (Low-Impact Facilities) Determination. Any changes will give adequate weight to industry and community sensitivities and consider NBN Co’s ‘on the ground’ experience.

The Government will also present to the Council of Australian Governments a proposal for state and territory governments to streamline their planning and development processes to implement a nationally consistent approach.

Additional policy decisions addressed in the Statement are:

* The role NBN Co, overseen by the ACCC, will have in delivering uniform wholesale national prices.
* The definition of ‘premises’, which NBN Co needs to connect to achieve the Government’s coverage objectives.
* That NBN Co will be the wholesale provider of last resort for fibre connections in new developments.
* That NBN Co will conduct a home-run fibre trial in a new development by early 2012 and, in consultation with the ACCC, provide a report to Government.
* Performance and monitoring arrangements including that NBN Co develop a charter that outlines how it will conduct its affairs to best meet the need of stakeholder groups.
* NBN Co is also to develop a comprehensive strategy for engaging with individual consumers during the rollout, including handling complaints.

Government response to the Study:

The Implementation Study was prepared by McKinsey and Company and KPMG and confirmed high-speed broadband for all Australians was achievable and could be built on a financially viable basis, with affordable prices for consumers.

The detailed and rigorous Study into the NBN made 84 recommendations for the Government to consider. Those recommendations covered technology, financing, ownership, policy framework, and market structure.

The Study was informed by comprehensive stakeholder consultation with industry, vendors, consumer groups, the finance sector, and international experience and trends. Since receiving the Implementation Study, the Government has taken decisions progressively on its recommendations and provided NBN Co with directions to implement those decisions.

“In the period since the Study was delivered, and following consultations with NBN Co, industry and other stakeholders, a number of events have occurred that have had a bearing on how the Government has responded to the Implementation Study and its key recommendations,” Senator Conroy said.

“Three events stand out: the Financial Heads of Agreement between NBN Co and Telstra; the Commitments to Regional Australia agreed with the Independent Members Tony Windsor and Rob Oakeshott following the Federal election; and the joint ACCC/NBN Co consultation process on the number and location of the POIs to the NBN conducted in October and November 2010.”

A large number of the recommendations were also responded to by the NBN legislation introduced into Parliament on 25 November 2010 and by the Fibre in New Developments policy statement on 9 December 2010.

In July 2010, in line with the Implementation Study recommendation, the Government set NBN Co an objective to reach 93 per cent of premises with fibre technology by the end of the rollout period.

The Government also requested NBN Co to build the wireless network that will deliver fixed wireless services, delivering peak speeds of at least 12 Mbps, to premises in the 94-97 percentile of premises.

The Government expects NBN Co to maximise the use of existing infrastructure where it is efficient and economic to do so in the delivery of the fixed wireless network.

The Statement of Expectations is available at: