Implementation Study Gives Tick to NBN

The Government today released the Implementation Study prepared by KPMG and McKinsey which was commissioned to examine myriad aspects of the NBN project, including the NBN's coverage, the Government's ownership, the operating arrangements of NBN Co Limited, commerciality and competition objectives as well as ways to attract private sector investment. In short the findings say NBN:

  • is viable
  • can be built for significantly less than $43 billion, and
  • the Government will ultimately recover its investment on a sale.

Key findings of the Implementation Study

  • The Government's objectives for the NBN can be implemented within the $43 billion earmarked for the NBN project, and the creation of the NBN may only cost around $26 billion. This can be achieved by deploying:

    • fibre to 93% of premises (up from the Government's promised 90%)
    • fixed wireless and satellite for 4% of premises, and
    • satellite only to the final 3% of premises.

  • Consumers will benefit greatly from the NBN with:

    • speeds of between 25 and 100 Mbps, and
    • monthly prices of $50-$60 are possible.
  • NBN Co should continue to be fully Government-owned until after the NBN rollout is complete. It could then be sold and would recoup the Government's initial investment plus a utility-style return on investment.
  • At this time, rather than diluting equity in exchange for assets of other telcos, there is a large capacity for investment-grade debt prior to full privatisation of NBN Co.

  • To ensure efficient deployment of the NBN, the Government should:

    • set clear, practical and transparent obligations
    • maintain a willingness to share existing infrastructure
    • provide all required legislative support to NBN Co, and
    • run a public tender process for a provider to build and deploy a fixed-wireless solution.

  • Retail competition can be improved by:

    • eliminating network and backhaul bottlenecks
    • maintaining NBN Co's wholesale-only, open access mandate
    • operating at the lowest appropriate layer, and
    • monitoring the health of retail competition.
  • Entry level wholesale prices for voice and 20mbps service around $30-35/month is possible.
  • The NBN will require a mixed physical deployment with both duct and aerial components, potentially meaning another wire on poles for up to 55% of the distribution distance.
  • The fibre network could become the primary fixed line telecoms infrastructure through affordable pricing and providing continuity for existing services.

The Government has said next week's budget will have full provisions for the NBN project.

The Implementation Study is available for review here.

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