Oakeshott: Coalition's NBN may only save $5 billion

Oakeshott says any NBN cost benefit analysis carried out by the Coalition needs to consider the cost of maintaining the existing copper network or it risks coming up with “false figures”.

The private sector and the NBN

In its 2012-15 corporate plan, NBN Co stated the government would provide an estimated $30.4 billion in funding for the NBN. Another $13.7 billion in funding would come from peak debt, with NBN Co’s initial corporate plan indicating additional debt funding would “involve private sector investment”.

Oakeshott says that informal conversations indicate there is strong interest in the private sector investing in the NBN.

“[However], there’s a reluctance to get too involved too early and that is partly due to some of this politics that is making that business decision more difficult,” he says.

“People aren’t willing to take such a large risk so early when the politics is still not clear, but when the time’s right I don’t think there will be any problems whatsoever in the private market being involved … over the next five years.”

Interest in investing in the network could come from domestic and international companies, according to Oakeshott, and Australia should learn from New Zealand’s experience and involve the private sector in the project at the start, not the end.

He believes private sector involvement has also been hindered because the NBN is viewed as risky by some companies, which have chosen to take a ‘wait and see’ approach: waiting until uptake is higher and the risk is lower.

For example, James Spenceley, CEO at ASX-listed company Vocus Communications, told Computerworld Australia last year that it wasn’t investing in the NBN yet because of the limited rollout of the network so far.

“Without bipartisanship and at a very early stage of a decade-long build, risk is quite high for [the] private sector at this stage,” Oakeshott says, “but as those key risk factors drop away, potentially this year, I think you will see a lot of very positive interest from the private sector.

“I think issues around when and where debt financing is involved is now starting to be a conversation that needs to be had and getting the election out of the way [and] clarifying some of the policy issues, dependent on who wins; I think that will up the ante on some of those conversations between government and the private sector.”

Oakeshott optimistic about NBN targets

Oakeshott says there are both positive and negative aspects of the current NBN rollout. On the positive side, he cites the speeds achievable on the network, its reliability and its rate of return.

The downsides of the project are that it is running behind schedule, the high up-front capital costs and some issues faced by residents transitioning to the network.

“In any of these changeovers or transitions you can get all sorts of technical issues and they’re bobbing up all over the place at an individual level, as well as [in] communities like Julia Creek in Queensland who are on the backbone, yet can’t access it,” he says.

“I just think transition issues need to continue [to be worked through].”

Despite some of these technical issues, Oakeshott believes NBN Co will meet its target of passing 286,000 premises by June this year.

The company announced recently that it has passed 72,400 premises in greenfield and brownfield sites.

“I think all the regulatory issues that were holding it up are over and they’re foot to the floor now,” he says.

“I don’t have any evidence to prove otherwise. [But] I’d be disappointed if they’re just pulling all our legs.”

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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Tags Malcolm TurnbullNational Broadband Network (NBN)Rob Oakeshottfibre-to-the-home (FTTH)fibre-to-the-node (FTTN)

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