PIPE v NBN Co continues

PIPE CEO says 20-30 year return on NBN 'abnormal' by telco industry standards

Pipe Network's CEO, Bevan Slattery, has fired another salvo in his debate with the company charged with rolling out the National Broadband Network (NBN), arguing that NBN Co’s intention to seek a 20 to 30 year return on the government’s investment was considered “abnormal” within the telco industry.

“Unlike many utilities (water and power reticulation) Telco is a much higher risk of capital (and return),” Slattery wrote responding to NBN CO, CEO Mike Quigley’s comments made during the recent CommsDay summit.

“A utility can seek a return on capital of beyond 10 years, not a telco project. This is because there is little development in alternate water or power reticulation systems over the past 20 years, whereas data (bytes) have seen many, many different and alternate technologies over the past 10 years let alone 20 or 30.”

Slattery also wrote Quigley had neglected to detail a time frame for capital returns or fully franked dividends made to the private investors which the government planned to help fund the $43 billion NBN project.

“Paying the government's equity contribution ([I] would like confirmation of exactly what that number is) over [a] 20/30 year period sounds like an 'interest free loan' rather than a commercial return,” Slattery wrote.

The Pipe CEO also called for the release of not just the NBN implementation study but the detailed NBN business case, arguing it was essential for proving to both the ISP industry and public that the NBN could deliver 90 per cent of Australian homes connected to a fibre to the home (FTTH) network, plus private investment fully supported by a commercial return.

“So whilst it has a broader set of objectives (which I can agree) you need to be clear about keeping your core promises,” he wrote. “If there is a deviation to that, or an internal understanding that is no longer true, then you are misleading people with the perception that you can.”

Slattery also questioned whether the NBN would be net income positive by 2020.

NBN Co was approached for a response to Slattery’s comments but did not immediately respond.

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