State of NBN too uncertain for full corporate plan

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State of NBN too uncertain for full corporate plan

NBN Co releases figures for FY2015.

The state of the Government’s multi-technology mix national broadband network is currently too uncertain for NBN Co to make forecasts on revenue and rollout targets beyond mid-next year, the company revealed today.

NBN Co today released its corporate plan for FY2014-17, which traditionally has set out the company’s business case and rollout targets for the national broadband network over several years.

However the latest plan offers estimates only for the current fiscal year 2015, and uses the assumptions made in the Government’s strategic and fixed wireless and satellite reviews for the remaining two years in the stated period.

“NBN Co is not yet in a position to generate projections with a reasonable level of confidence for FY2016 and FY2017,” the company stated in its report.

“Therefore, any operational and financial data for FY2016 and FY2017 are long range assumed possible outcomes, not a forecast.”

The corporate plan should be viewed only as a “transition plan”, the company stated, given the high levels of uncertainty regarding the renegotiations of the Telstra and Optus agreements; industry and regulatory outcomes from the new-look NBN; NBN Co’s ability to rapidly deliver on its strategic direction; construction resources; and the state of the copper and HFC networks.

“NBN Co will undertake further planning during the course of FY2015 to inform the mix of technologies covering the period of this corporate plan. This baseline will be periodically reviewed and learnings integrated as more information becomes available.”

Shadow Communications Minister Jason Clare said the limited corporate plan was a result of the Government's focus on "pointless political reviews". 

"In a plan that should have a three-year horizon, the most [Communications Minister Malcom] Turnbull can manage is seven months," Clare said in a statement.

"It is now more than 14 months since he got the job and all we’ve got is a second rate plan to match his second rate network."

The latest corporate plan reaffirms the company’s goal to reach just over 1 million serviceable premises, 481,000 activated premises and $160 million in revenue by the end of the current fiscal year.

The company expects it will have 1.03 million serviceable premises by the end of fiscal 2015, with 47 percent of those on active services.

Most of the serviceable premises will be brownfields (existing) premises in the fixed-line footprint (590,000 specifically), while 165,000 will be fixed-line greenfields (new developments), 230,000 will be on fixed wireless, and 48,000 will be on the interim satellite.

Of the 481,000 forecast activated premises, NBN Co expects the majority (310,000) will be fixed-line brownfields; 75,000 will be greenfields; 50,000 will have fixed wireless services; and 46,000 users will be on the interim satellite.

NBN Co last week released its long-awaited mix of broadband technologies under the new multi-technology mix NBN, revealing fibre-to-the-node will become the default access technology for most Australian premises.

Fibre-to-the-premise - the predominant technology under the former Labor NBN - will remain part of the network only in areas where it has already been deployed, is in advanced stages of a rollout, or for new developments with more than 100 lots.

NBN Co could still decide to deploy fibre all the way to the premise in specific locations which made commercial sense (such as a business park) or where the copper is too degraded to be used.

The company is expected to release a geographic breakdown of which areas will receive which of the access technologies in the coming weeks.

ACCC backs splitting up NBN Co

Speaking following the release of the corporate plan today, chairman of the Australian Competition and Consumer Commission Rod Sims backed a proposal to split NBN Co up into business units along the lines of its network technologies.

Sims told the NBN:Rebooted conference in Sydney today that the Government should separate NBN Co prior to privatising the government-owned body in order to ensure competition.

He said the ACCC supported the Vertigan panel’s recommendation to split NBN Co into competing FTTx, satellite, fixed wireless and HFC business units.

Sims said the ACCC agreed that such a move would for the first time in Australia create a market structure that offered potential infrastructure-based competition through utilising existing assets.

“Some of you will recall that as far back as 2003 the ACCC recommended to government that it require Telstra’s divestiture of its HFC network and 50 percent interest in Foxtel to ensure the development of infrastructure-based competition between copper and cable in telecommunications and pay TV services,” Sims said.

“Telstra’s 50 percent interest in Foxtel is a key difference between Australia and many other countries.

“While in the past, the ACCC and others have advocated for the principle of infrastructure-based competition, the present opportunity to shape the future market structure through control and decisions over the major infrastructure assets in this country has not previously existed.”

Sims said that while he understood the Government was not keen to immediately embark on separation given difficulties in the rollout’s progression, it was ‘imperative” that it put in place measures now to provide for the future partitioning of NBN Co.

“Such arrangements should include internal systems, accounting and reporting arrangements. The ACCC’s experience is that if this is not done early it will be extremely difficult to do down the track. While putting in place such arrangements may come at some initial cost, the benefit of doing so when it comes to separating the business in future will be far in excess,” Sims said.

“It should be done prior to any privatisation of NBN Co. After that time, it is highly unlikely that separation will ever occur.

“It will be strongly in Australia’s long term interests for, say, three separate entities based on delivery technology to be sold that can provide a platform for future infrastructure based competition.”

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