Parliamentary report: NBN Co should prioritise funding models

NBN Co needs to begin discussing how it is going to fund the rest of the National Broadband Network (NBN) after government investment, a parliamentary report has stated

The Joint Committee on the National Broadband Network (NBN) has called on NBN Co to provide details on how and when it intends to begin transitioning to a funding model which incorporates private equity.

Government funding for the NBN has been capped at $27.5 billion, with $2.482 billion already invested by the government.

“The committee continues to be interested in when and how private equity might be engaged in funding the NBN wholesale platform, and at what financial return to the government and, ultimately, taxpayers,” the Review of the Rollout of the National Broadband Network Third Report reads.

While NBN Co’s corporate plan detailed $13.4 billion coming from debt, which would, according to the report, "provide a mechanism for repayments of equity over time", Mike Quigley, CEO of NBN Co, stated in April this year that the company has not yet discussed debt financing.

“…It would appear to be critical for NBN Co to start considering its debt financing arrangements as soon as possible, given the fast-approaching timeframe of 2015 for the commencement of debt financing; that debt financing is projected to constitute 33 per cent of total NBN Co funding required over the period FY2011-FY202141 … [and] that the ‘level and timing of debt’ has been identified as a ‘major financial risk that NBN Co will need to continuously assess’.”

Malcolm Turnbull, shadow minister for communications and broadband and a member of the committee, has also used the parliamentary report to reiterate his stance that a mixture of architectures should be used to provide high speed broadband.

In a Dissenting Report by Coalition Members and Senators, the ‘minority’ recommended the government look at speeding up the rollout of the NBN through the deployment of different architectures, including fibre-to-the-node, where appropriate.

“The Department should undertake a study of cost and timing of deployment in comparable economies of various architectures which should inform a rigorous cost-benefit analysis of options for broadband upgrades,” the paper said, signed off by Turnbull.

“We note migration to the NBN has been weak, reflecting the fact that few applications exist to take advantage of 100mbps bandwidth and residential households are mostly unwilling to pay any significant premium for increased bandwidth.

“In Tasmania, for instance, the NBN added only 100 customers during the past year and take-up rate is still only 18 per cent.”

The minority also questioned the “excessive” $20 million spent on advertising to assist consumers on migrating to the NBN, given low take-up rates.

“Given the NBN Co is experiencing a lull in activity in greenfields fibre installation, the Department should [also] revisit policy proposals to promote competition in greenfields areas and encourage private providers to invest in fibre networks.”

The joint committee developed 15 recommendations, including a requirement for NBN Co to detail business plan targets and statistics on the number of homes passed and connected and services in operation, and the government to provide KPI information matched against NBN Co’s business plan.

The committee is chaired by independent MP, Rob Oakeshott, and was established in March 2011 to report on the NBN every six months until it is completed and operational.

The committee will address NBN pricing in its next review.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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