The Guardian has published “secret figures” revealing how the Coalition’s cut-down NBN tech was three times more expensive than forecast and ended up costing almost as much as the full-fibre plan:
The previously redacted 2013 figures detailing the estimated cost of the Coalition’s alternative model – relying on trouble-plagued pay-TV cables and fibre-to-the-node technology – show the true scale of the NBN cost blowout over the past eight years.
When the Coalition won government in 2013, then communications minister Malcolm Turnbull commissioned a strategic review into the national broadband network to validate switching from rolling out fibre-to-the-premises for 93% of homes to a mixture of older technology using Telstra and Optus cable networks and fibre-to-the-node which then utilised existing copper lines to premises.
The report, released in December 2013, claimed the former Labor government’s model would cost $74bn and not be completed until 2024, while the Coalition’s model would cost $41bn and be finished in 2020.
For years large sections of the report have been kept secret, including crucial estimates on how much it would cost to build each type of technology out to each home.
But the redacted figures, obtained by Guardian Australia, show NBN Co in 2013 estimated the cost of using the hybrid fibre-coaxial (HFC) pay-TV cable networks was between $800 and $850 per premises. The cost of building fibre-to-the-node was estimated to be $600 to $650 per premises.
In reality, as NBN Co encountered upgrade issues with both types of technology, the cost has been up to three times higher. The average cost per premises for fibre-to-the-node is sitting at $2,330 and HFC is at $2,752, according to the latest figures detailed in the company’s 2021 corporate plan…
This confirms reporting by Nine newspapers earlier this year that the radically redesigned fibre network could have been at least $10bn cheaper than initially estimated – costing as little as $60bn when taking into account lower interest rates NBN has been paying on debt.
The cost of building fibre networks has come down since 2013. In New Zealand, Chorus was able to reduce the cost per premises from A$4,753 in 2014 to A$2,598 in 2019. In Australia, the 2013 strategic review claimed it would cost $4,777.
The problems with the NBN date back decades.
First and foremost, the Howard Government’s privatisation of Telstra in the late-1990s gave it control of both the wholesale and retail networks. This made it a vertical integrated monopoly, meaning that competitors were forced to rent the fixed line telephone network for access.
The NBN was initially designed by the Rudd Government, in part, to remedy this structural mess. But it came with a huge taxpayer bill, with the Gillard Government in 2011 agreeing to pay Telstra $9 billion in instalments for its fixed line customers to migrate to the NBN.
By contrast, New Zealand did not face these issues.
Unlike Telstra, Telecom NZ was split into a wholesale operator, Chorus, and a retailer, Spark.
Chorus won the vast majority of the work to build Fibre-to-the-Premises (FTTP) networks, which meant it could use all of its existing legacy assets to build their new FTTP network. This obviously reduced duplication, dramatically lowering the cost of the build.
Moreover, unlike NBN Co, which was created as a start-up Government Business Enterprise, Chorus also had the embedded technical expertise to get the job done.
Malcolm Turnbull added to the problems by abandoning plans to build a FTTP NBN across most of the country. Instead Turnbull replaced it with a multi-technology mix (MTM) that included previously retired copper cabling.
This change to MTM was marketed as a cost-saving move by Turnbull. But, the massive amount of rectification works required quickly saw the price tag for the NBN jump from $30 billion to more than $50 billion.
In the end, Australians have been left with an expensive NBN dud that costs many customers than the old ADSL service it replaced, and often is not much faster.
When it comes to the failings of the NBN, there’s plenty of blame to go around.
