Prev
Next

Awaiting the bill for the NBN

Mark Kenny

by Mark Kenny

06 May 11:44am

Must Reads

If sports movies have taught us anything, NSW will win - this is a caption

If sports movies have taught us anything, NSW will win

42

Schapelle has done her time - this is a caption

Schapelle has done her time

158

Do women need to know when to walk away? - this is a caption

Do women need to know when to walk away?

71

Filed under: Broadband, Stephen Conroy, Telecommunications

35 comments

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.

It's going to cost how much? Picture: Liam Kidson.

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.

Most commented

418Australia, you have nothing to fear but fear itself
353"Gifting", "journey" and other words we hate
311Thomson didn't answer the question everyone is asking
262Who murdered the Arts degree?
246A big day for Thomson, who thus far is guilty of nothing...
231Craig Thomson speaks. Meanwhile, in Australia...
230South Australia. It's the middle bottom bit.
224The most laughable, err, spoof since Einfeld

35 comments

Show oldest | newest first

    • Mark says:

      01:22pm | 06/05/10

      They already backflipped on the first $4.7 billion proposal.

      This is an uncosted programme with no cost benefit analysis done.

      The head of the operation admitted it wouldn’t make money for 30 years at best.

      Given their recent managerial failures how can we have any confidence in this?

      Plan A had us all hooked up in 5 years. This plan B is a perfect Rudd plan, after the first failed. It will happen “sometime” in the future. Not now. Later. Convenient isn’t it?

      I especially like the part where after getting the first report the didn’t like what they read so they sent it back to be re-done. No hint of a whitewash though, no no no. Could never happen. I guess if you pay $25 million for a report it must be good eh? An easy escape and blame shifting path when it all goes wrong…you can hear it now “but the experts said so”.

      Another Labor and Rudd failure incoming. What a mess.

      Reply

    • Rhys says:

      02:52pm | 06/05/10

      The analysis by KPMG was released today.

      The costings are to be about 5bn less AND state that telstra should be left out of the network building.
      It also states that the network will be able to make a return in 15 years while pricing well under current telstra wholesale prices.

      Nice try tho.

    • JR says:

      03:10pm | 06/05/10

      No Rhys
      The report states

      The costings could be $5B less. Or they could be same. Or they could be somewhere in between. $38-$43B is the estimate.

      That implementing it without Telstra would be possible, but with Telstra is preferred.

    • Mark says:

      03:20pm | 06/05/10

      Cool Rhys.

      I knew it was out today. I haven’t read any though buddy.

      So let me see mate you are knowledgeable.

      On what basis are they estimating the thing to be profitable? On a EBITD basis or after?

      Why was the report rewritten at the governments request? What first findings were unpalatable?

      So it is gong to cost $38 billion and not $43 billion eh? Can you personally underwrite, for us the Aussie taxpayers, any over runs please?

      Can you explain to all the Telstra shareholders how they should feel about the government opening up in competition with them?

      I live on the mid north coast of NSW in a large town. Tell me when I can get my 100mb speed fibre optic cable. I want to know. Tell me not the wholesale cost but the retail cost to me of the plans available. Hmmm?

      Tell me my quota limits for this wonderful new service.

      I love the news report you have read though.The spin is starting already. Great on promises for the “future”

    • TC says:

      09:08pm | 06/05/10

      The report is irrevant. They will ignore all expert recommendations anyway.

      Look at the use of the Henry Report.
      Look at the action with regard to expert opinion on the censorshi…. sorry…internet filter.
      Look at action with regard to expert recommendation on insulation.

      This mob have no use for expertise.

    • Matt says:

      10:34pm | 06/05/10

      And in order to conclude it is viable the report assumes no competition. Is the Rudd government going to make illegal for Telstra or anyone else to offer broadband or other newer internet services in the future? Is it Rudd’s plan to have a single Government owned and censored internet service? This Government gets scarier by the day.

    • John A Neve says:

      01:48pm | 06/05/10

      I’ll repeat what I have said many times before, Telstra should never have ben sold. With it’s sale we lost all hope of a National Broadband System.

      Private enterprise has neither the resources of the desire to build it. They will service the big cities and maybe the larger regional centres, but they are not interested in beyond the Black Stump.

      If we truly want a National System we need to buy back Telstra and use it as the tool to build and maintain the NBS.

      A public owned utility should not be about profit, rather it should be about not making a loss. Provided it broke even and made provision in it’s charges for future development and depreciation, it has done it job.

      Private national coverage, forget it.

      Reply

    • Steve Turner says:

      01:50pm | 06/05/10

      No mention of the $25m cost of the report or that it was sent back to consultants for extensive rework by Conroy, or the fact that the technology will be obsolete before completion.
      Inspires about as much confidance as the audit report of BER which did not investigate the $7B syphoned off to big business, state governments and unions.

      Reply

    • Michael says:

      01:57pm | 06/05/10

      in response to “The head of the operation admitted it wouldn’t make money for 30 years at best.”

      fibre internet should be treated as an infrastructure investment, just as say, national highways are. if they were commercially feasible the commercial sector would have already built them and be profitting from their existence. unfortunately not all necessary infrastructure is commercially feasible and that is where governments step in.

      the government is not out to make a quick profit they should be investing in projects that provide a long-term future value, such as a national fibre network

      Reply

    • Mark says:

      02:22pm | 06/05/10

      Couldn’t agree more Michael.

      Explain then why without a cost benefit analysis, or a prospectus or anything more concrete than a back of the envelope job on a few plane trips Rudd and Swan were encouraging mums and dads to invest in the project.

      Do you think it was a little bit illegal and misleading to do so?

      It is hard to run the utility asset line when the PM and Treasurer are encouraging everyone to jump on board because, gosh, it is a great investment.

      Notice how they do not say that anywhere anymore? Someone with a brain got in their ear and said naughty naughty. The government does not want to keep the asset. The premise of the project is for private sector involvement and eventual sale. To do that they have to provide a going concern.

      Pro tip too. Long term future value would be in wireless technology.

      Still we should wait to see the cost of a 100mb plan from a reputable telco that has a decent amount of quota included. The proof will be in that pudding - in about 10 -15 years when the project will probably be finished. Awesome.

    • Brian says:

      02:02pm | 06/05/10

      Whole world is going wireless…....Australia is the 6th largest country in the world with 22m people, possibly the lowest per capita per sq km and we are rolling out cable? Hmmmm progressive Kev ?

      Will not happen, too hard, too expensive - can we vote these fools out? Quentin what are you doing? Can you dissolve parliament?

      Reply

    • Darryl Price says:

      02:07pm | 06/05/10

      I was pleased to hear that Emerald (CQ) would be one of the first 2-3 communities to get a hook up into the NBN network (not least because I expected the balance of the project to die an uneconomic death). Then I find out from the well connected broadband chap in town that success for this project will be an optic fibre link into the exchange, followed by a photo op with Chris Trevor the local Labor man. My own bigpond adsl internet service will remain as sloooowwww as ever. I live in town in an area developed not more than 15 years ago with underground power and town water. NBN what a lot of cock.

      Reply

    • Tom says:

      05:12pm | 06/05/10

      Darryl Price,  You got it 100% correct. I work with computers but cannot name a single user application that would achieve a noticeable gain by multiplying the bit speed by 100? Then tell us what the extra cost will be? The NBN logic is like forcing a gullible public to pay $400 for a self pealing banana.

      And the comrades get to punish Mums and Dads who purchased Telstra and destroy baby boomers’ superannuation. What working class heroes these mongrels are.

    • Michael says:

      07:20pm | 06/05/10

      Tom how about this one application

      uTorrent

      and if you were looking for content, say, streaming pornography?

      the user benefits are endless!

    • Tom says:

      08:19am | 07/05/10

      Michael,
      Good call (I think you had tongue in cheek).

      Utorrent certainly is one. I hear Sony, EMI and artists just love it. The other ...

      Accelerating these fulfilling activities would be worth every cent of the government’s helpful leg up of $42 billion. Bugger the taxpayer. Let’s spend, Conroy.

    • Gordon Akman says:

      02:23pm | 06/05/10

      There are some fantastic ideas emanating from countries around the world. A couple of ideas ideas that I would like to see gain some support are governments not spending more than they collect in tax revenue and individuals being encouraged not to spend more than they earn.

      Reply

    • AdamC says:

      02:43pm | 06/05/10

      The NBN is a nonsense. I really hope it will be another Dudd policy shelved before the election. It is almost like we need to have some basic standards of rigour and propriety for politicians in approving major expenditure projects. It is just unacceptable to risk countless billions solely to save face.

      Reply

    • Peter says:

      03:07pm | 06/05/10

      Adam, you know what the NBN is really about don’t you? Streaming TV so you can be forced to watch commercials… That’s its main aim…

    • Jenni says:

      02:45pm | 06/05/10

      I get a little frustrated at people’s insistence that private enterprise in Australia cannot build and sustain a high speed network. If you look at America (and yes, I know many people hate hearing anything favourable about the US, my apologies wink all of their communication networks - be it mobile phones or internet - were built by, and are sustained and managed by - private networks, and they have some of the fastest AND cheapest network speeds in the world.

      The reason Australian companies don’t want to build the network is because they know if they sit on their hands long enough, the government will step in (as it is now trying to do) and do it for them. These companies will then happily use the provided infrastructure, passing it on at *massive* cost to the public. We will *still* have more expensive internet at slower speeds than just about every other leading nation in the world, and the private companies - making huge profits for bugger-all effort after the government has done all the hard work - will be laughing all the way to the bank.

      At our expense. Again.

      Reply

    • John A Neve says:

      03:17pm | 06/05/10

      Jenni,

      Firstly it is not a case of whether private enterprise can do it, it’s more of do they want to do it?

      As to American coverage the latest figures I can find suggest they only have 66% broad band coverage, 14% dial-up Internet and 20% with no Internet access at all!!

    • JA says:

      03:59pm | 06/05/10

      John A Neve thinks access to the NBN is a human right, a must have, en “equitable” social service.

      The fact isthe elderly, the broke, the drap outs do not want or need this service - in fact I wuold suya those yanks you refer to as “having no internet” probaly don’t want or need it either.

      The ALP, under it’s current plan will provide subsidised high speed intenet to grannies and dopes at our expense.

    • John A Neve says:

      05:36pm | 06/05/10

      JA,
      I think you need glasses, try commenting on what I said, not what you think I said. This drive for a national broadband network was/is public driven.  You only have to read back issues of The Punch.
      What is it about “grannies and dopes”, they carried you when you were still sh****** your pants. Why shouldn’t thy have internet access if the want it?
      Based on your level of post, I doubt you contribute to any thing!!

    • Peter says:

      02:45pm | 06/05/10

      We are spending $40 billion dollars on imaginary technology that does not exist. This is a waste of money. It will not be used to take pressure off our current infrastructure like roads and public transport. All the NBN is about is “streaming” so you can be forced to sit through advertising commercials.. That’s it folks!! It’s only for TV….

      Reply

    • acker says:

      03:52pm | 06/05/10

      In remote communities they are talking about it being able to allow specialists in cities treat and perform remote robotic surgery on patients. So it does have merits beyond TV.

    • Tom says:

      02:31pm | 07/05/10

      acker,
      1. who do you think would set up the internet operations? the postman or the local stock and station agent? How much would a robot for every one horse town cost?
      2. for $42 billion, you could fly a lot of people in and out of those remote places.
      Sorry, Peter is 100% right. NBN is a socialist wet dream.

    • Peter says:

      03:44pm | 07/05/10

      @ Acker, the internet has enormous potential for the delivery of medical services to the bush, we don’t necessarily need an NBN. I don’t oppose an NBN per se, but I would prefer to see a good commercial reason for doing it.. If some pollie said to me, hey “if we build that NBN, it will save us $15 billion in rail and train expenditure, or $20 billion in road upgrades (because we are taking pressure off our infrastructure), then i would say we are on to something. But if we want an NBN to “stream” IPTV, then Conroy can get stuffed, he’s wasting our money.. I work in the industry, I hear the opinions of experts on this, and to them it’s all about TV…  I love my telly as much as the next bloke. I’ve got Foxtel and usually surf through 50 channels of nothing to watch. Now the NBN will give me 100 channels of nothing to watch… oh and lets not forget the imaginary technology that doesn’t exist yet that we’ll be using it for as well….. Whatever that groundbreaking technology might be, its only going to be data, so im not sure what they are expecting….

    • jack says:

      02:50pm | 06/05/10

      Considering the way in which Rudd and Conroy have ignored all the experts on the issue of the internet filter I shudder to think how a $43billion project devised by the same people will pan out.

      Reply

    • Helena Handcart says:

      03:10pm | 06/05/10

      You can’t guess or are you being facetious?  Standing next to Katter makes anyone look sensible.

    • acker says:

      03:26pm | 06/05/10

      Bob Katter might be their (Conroy & Swans) bouncer or nanny or something like that..wet nurse perhaps

    • Wayne Fehlhaber says:

      07:51pm | 06/05/10

      Acker , their idea is to emphasise that their plan will carry into remote areas of Australia . Katter is readily identified as representing one of the most remote federal electorates in the country. You would tend to think that Labor Ministers would stay well away from the ” arrogant arab ” as he is well known for his lunar lunatic episodes.  Must say though , the constituents in the federal electorate he represents just love him.
      Seriously , i question whether there is a real need for this type of expenditure on something we can do without. Health infrastructure is desperately in need of funding to provide services we can’t do without.

    • Albie says:

      04:19pm | 06/05/10

      Is it just me, or does he look like the Master from Dr Who?

      Reply

    • Max Power says:

      07:50pm | 06/05/10

      No doubt this Govt will take a program that should be built for less than originally thought and turn it into a program that blows by billions. This Govt is a fitter and turner, they take perfectly good ideas and turn them into $hit.

      Reply

    • Robert Smissen says:

      11:03pm | 06/05/10

      Will my house catch on fire if I connect to the broadband via Little Kevvy. Will an installer die in my roof space

      Reply

    • PKN says:

      09:06am | 07/05/10

      Ohh what whinging,  Howard crashed my Telstra stockprices while maintaining our 1990s level of service in rural areas.

      You city folks and miners can suffer some pain and extra fees if that gets us some spinoff better services out west… Considering we have 100s of billions of stuff to dig up who cares about $40 billion? Are our creditor raters saying we are have a dodgey loan rating? Umm no!

      Do you or the Libs have a plan for getting us into the 21st Century economy ? Or letting us regional folk particpate in the global economy? Umm no!

      Be quiet then.

      Reply
 
Comment

Facebook Recommendations

Read all about it

Punch live

Up to the minute Twitter chatter

ToryShepherd

ToryShepherd 24 May 12 08:44AM

What about Weet-Bix? “@Slate: How to make pork-infused veggies: http://t.co/ZYOOxVVT”

Lucy Kippist

lucyjk 24 May 12 08:08AM

@christoforpaine sorry! Actually thought I already was... Weird?

Lucy Kippist

lucyjk 24 May 12 08:08AM

@dreshubby you wont know until you try!

Malcolm Farr

farrm51 24 May 12 08:06AM

Carbon tax?RT @danielsutton10: Terrifying number: Hewlett-Packard cutting 27,000 jobs worldwide to save $3 billion. #tennews#tenbreakfast

See all tweets

Recent posts

The latest and greatest

Animal experiments won’t cure me from cancer

by Helen Marston

40

Animal experiments won’t cure me from cancer

Lying on a cold table in an unfamiliar place and undergoing a core biopsy was probably one of the most…

If you want to get promoted, laugh at the boss’s jokes

by Kate Southam

27

If you want to get promoted, laugh at the boss’s jokes

Red alert, ladies. Making jokes about your ability at work is not funny particularly at board level.…

Need someone to do your dirty work? Try God.

by Tory Shepherd

20

Need someone to do your dirty work? Try God.

Punishing the baddies is only fun in the movies. In real life it’s messy, expensive, and fraught…

Nosebleed Section

choice ringside rantings

From: They must pay for one’s bitter disappointments

Michael S says:

"A teacher at Geelong Grammar had criticised her for using words that were too long, which had left her confused and had made her doubt her ability to write essays. She became ''quite distressed'' when her English marks began to fall." I can sympathise. My scholastic mentors conveyed to me a causal relationship… [read more]

From: Welfare for breeders is a bonus for everyone

Change Up! says:

I have no problem paying my taxes. As a single, childless person on a very decent income, I can afford it and not have my life severely altered. Plus I understand that my taxes paying for things like schools, childcare and infrastructure is ultimately a good thing. A better community is better for me… [read more]

Light weight

Gentle jabs to the ribs

They must pay for one’s bitter disappointments

They must pay for one’s bitter disappointments

A private school girl’s family is sueing her elite, extremely expensive private school for not… Read more

242 comments

Newsletter

Read all about it

Sign up to the free daily Punch newsletter

Subscribe to The Punch RSS feed