Conroy: NBN "on track", wholesale broadband prices to fall over time

Capital costs of NBN are set to increase by 3.9 per cent to $37.4bn

The capital costs of the National Broadband Network (NBN) are set to increase by 3.9 per cent to $37.4bn, Minister for Broadband Communications and the Digital Economy Senator Stephen Conroy has announced.

The government is “on track” to meet its target to provide the network for 758,000 fibre premises commenced or completed by the end of 2012, he said. However, the construction time for the NBN has been extended by six months despite the nine-month delay due to the completion of the Telstra deal, he noted.

Conroy along with NBN CEO, Mike Quigley, on Wednesday announced the NBN Co.’s corporate plan 2012-2015, which highlighted other milestones and plans for the construction of the broadband network. Included these are Telstra and Optus contracts which have become "unconditional" and are set to go.

NBN’s estimated cost is down from the plan’s original $43 billion. The six month extensions is despite the nine-month delay due to the completion of the Telstra deal, he noted. The operating costs are expected to be about $26.4 bn.

Wholesale broadband prices are projected to fall over time in both real and nominal terms.

He also announced the government has finalised the $11 billion definitive agreements with Telstra, and the completion of the Optus deal and approval by the Australian Competition and Consumer Commission.

He has also announced the execution of construction contracts for every state and territory across Australia across fibre, next generation fixed wireless and satellite.

Conroy called the NBN a “sound investment” that will pay its own way and generate a 7.1 per cent equity return for the taxpayer, and start paying dividends.

"Fibre is the best technology that will serve and economic and social needs of the future," he said.

Conroy defended the NBN against reports of an alternative plan by the opposition calling it a long-term plan, and what Sydney Harbour Bridge was to Sydney decades ago.

If the builders of the Sydney Harbour Bridge had the foresight similar to the government's opposition plan for NBN, the bridge would have been a one-lane-each-way bridge, causing traffic nightmares today, he said.

"NBN is being built for the next 50 years and beyond that, not for today," he said.

The 2015 plan also includes:

*Completing the transit network in FY2015. This includes the deployment of Dark Fibre connectivity, 121 Points of Interconnect (PoIs) and more than 650 Fibre Access Nodes; the remaining FANs, being estimated at more than 400, to be built over the FY2016 – FY2021 period

*Launch of two satellites with commercial operations starting in mid-2015.

*Rollout of the fixed wireless network to provide access services in regions not covered by NBN Co’s satellite and fibre networks.

NBN Co is planning to use a new ‘build drop’ strategy, which will be more cost-effective in the long run than the performing ‘demand drop,’ given the agreement with Telstra to disconnect its copper network, according to the plan. Build drop is where a connection from the street to the premises is carried out when the distribution and local segments of the fibre network are being built, according to NBN.

As at 30 June 2012, NBN Co had completed or started construction for about 305,000 premises.