Awaiting the bill for the NBN
Update 2:20 PM: Communications Minister Stephen Conroy has announced today the NBN will be able to be completed for $5 billion under initial budget at $38 billion. The implementation study also found the network could be viable without Telstra, but said it would be preferable for the Government to strike a deal with the telco.
Australian households and businesses will find out today how much they will have to pay for state-of-the-art broadband when the Government finally tables long-held advice on its controversial $43 billion national broadband network.
A detailed implementation study into the proposed NBN, which promises broadband connections to virtually all Australian homes and businesses at speeds of of up to 100 megabits per second, will be released this afternoon.
That speed will support a variety of new functions including internet TV and telemedicine as well as super-fast downloads.
But critics have long claimed the massive price tag had no basis in reality and was simply plucked from the air when the Government’s previous plan collapsed for lack of a credible bidder.
All eyes therefore will be on today’s report.
Conducted by consultant firms, McKinsey and KPMG, the 500 page study contains 84 recommendations and will provide much needed meat on the bones of the Government’s ambitious proposal.
The Government has been on the back foot since deciding on April 7, last year to establish the NBN Co in order to effectively build the system itself at a projected cost of some ten times the original price.
But crucial details as to how that $43 billion figure was arrived at and how the money would be spent have remained a mystery.
Negotiations are apparently ongoing with the key industry player Telstra but it is not known what role the giant telco will play.
Industry sources say its support is crucial but the Government wants structural separation of its wholesale and retail arms to resolve a conflict of interests between owning the infrastructure and also being one of the main providers of services.
This remains a sticking point.
In a classic understatement, given the poverty of information about the NBN plan, Broadband and Communications Minister, Stephen Conroy told an industry conference last month that the implementation study would “provide an opportunity for more informed discussion’‘.
The biggest piece of the puzzle is the price tag.
Industry insiders have speculated that the projected cost of the NBN could come in at substantially less and possibly as little as half the $43 billion slated last year.
That would be a plus for the Government which has remained tight-lipped on the details of the implementation report leading into today due to intense market sensitivities. The Minister’s office could only point to Senator Conroy’s previous comments.
“This is a detailed and comprehensive document,’’ he had said.
“It includes advice among other things on the detailed operating arrangements, network design, financial analysis, the structure of the company and the legislative framework around how the NBN should operate.
“It is a significant and important document for the future of this sector.”
You can say that again. Given recent difficulties for the Government, including a series of backflips and capitulations on botched programs such as the home insulation scheme, the Government can ill-afford another debacle.
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