Drip-fed to the finish line

18 November 2016

The Australian Government will spare NBN Co the trouble of finding the $19.5 million required to get the National Broadband Network rollout to the finish line in 2020. The plan is that by then 8 million homes and businesses will use the network, and the cost will be limited to a total of $49 billion.

Previously determined to only contribute $29 million to estimated $59 million the project is now estimated to cost, the Australian Government's plan was that NBN Co would find the money through private debt funding. And this is how it was layed out in 2017 NBN Corporate Plan.

But with a project the scale of the NBN nothing is really for certain. The Government now also thinks that finding the money from private sources could distract the company from ramping up the rollout, which will be needed to meet the targeted finish by 2020.

The conclusion is to chip in the money as a commercial loan to NBN Co, and then hope that the company will be able to re-finance the loan through the project anticipated privatisation in 2020-21.

The Government also makes the point that the strength of the nbn's business case has been bolstered by recent credit ratings from credit agencies.

The project's target is to deliver access to broadband speeds of at least 25 megabits per second (Mbps) to all Australian premises, and at least 50 Mbps to 90% of premises, by 2020. According to the latest 2017 corporate plan, it will require exponential growth to get there.

Thus, construction and activation rates need to almost double, which is a challenge "considering the extraordinary scope and complexity of the nbn™ network rollout.

On the upside, in the 2016 financial year the number of premises with access to the nbn more than doubled to 2.9 million - 138% growth on the previous year, and activated premises also more than doubled to 1.1 million - 126% growth on the previous year.

The NBN's multi-technology approach includes:
More information: http://www.minister.communications.gov.au