NBN Co to implement 120 points of interconnect

NBN Co to implement 120 points of interconnect

NBN Co yield to ACCC, ramping up the number PoI from 14 to 120.

NBN Co will establish 120 points of interconnect (PoI), according to a National Broadband Network (NBN) Corporate Plan released by the company overseeing the rollout of the fibre network.

The document, published by NBN Co, foreshadowed the release of the full NBN business case report, which was also released today. A summary of the business case was made available in November.

NBN Co is set to build or lease 120 PoIs and 980 fibre serving areas. This was a result of an intervention by the Australian Competition and Consumer Commission (ACCC). The watchdog opposed the Government’s plans of implementing only 14 PoIs located in capital cities.

PoIs are points where network traffic is handed over to ISPs. NBN Co initially expressed concern over increasing the number of PoIs in fear of decreasing competition on a retail level, which will impact the rate of return on the NBN.

Out of the 120 PoIs, 80 of them will be located in regional Australia.

The Corporate Plan provides forecasts over a 30 year period and assumes the deal between NBN Co and Telstra will go through. The $11 billion deal to migrate Telstra customers over to the NBN and decommission the telco’s copper network, will be subject to shareholder approval next year.

NBN Co is expected to generate a seven per cent internal rate of return through the NBN. This figure is based on assumptions made by NBN Co. Details of those assumptions have been listed in the full NBN business case document. The company expects 70 per cent of premises passed by the network will sign up on the NBN.

The figure exceeds the cost of funds and long-term bond rate, and NBN Co has taken this as validating the NBN is indeed financially viable.

Post construction revenue for the NBN is expected to be $20.8 billion with annual revenue forecast at $5.8 billion in 2021 and $7.6 billion in 2025.

Total capital expenditure for the NBN sits at $35.9 billion over a nine and a half year construction period. Total operational expenditure is estimated at $1 billion.

A national wholesale access price for its basic 12Mbps download and 1Mbps upload offering has been set at $24 per month. The Government could not give a ballpark figure on what consumers are expected to pay.

According to the Corporate Plan, initial funding for the NBN will be from the Government, which will put in equity of $27.5 billion.

“However, this will be paid back with a return over the life of the project. Other funding will come from operational earnings and private debt,” the document said.

The NBN business case document was released today.

More to follow.

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Tags TelstraNational Broadband Network (NBN)Australian Competition and Consumer Commission (ACCC)NBN Co business plan


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