Budget includes provisions for NBN termination

Funding for NBN advertising has been cut

The Federal Government has provided provisions for the termination of the National Broadband Network (NBN) in its 2013-14 budget.

The government announced it has entered into an equity funding agreement with NBN Co to provide the government-owned organisation with equity, with the agreement to terminate in 2021.

“In addition, it commits the Commonwealth, in the event of a termination of the National Broadband Network roll out, to provide sufficient funds to NBN Co to meet its direct costs arising from that termination,” the Federal Government said in its budget statements.

Costs for terminating the NBN at 28 February, 2013 have been estimated to be $3.4 billion.

The government has also provided NBN Co directors with indemnity against liability for failing to meet funding obligations to NBN Co.

“The directors are also indemnified in relation to claims arising out of their involvement in the negotiation and entry by NBN Co into the Financial Heads of Agreement with Telstra,” the budget statement said.

The Federal Government also revealed NBN Co had generated around $896 million in liabilities to Telstra.

It has also given a guarantee to Optus for payments to the telco under the HFC subscriber agreement to migrate customers from its HFC network to the NBN once it is available.

NBN funding

The Federal Government has allocated $12.9 million for NBN initiatives which demonstrate the benefits of the network.

The funding has been allocated to the Digital Enterprise program, which provides free NBN group training for SMBs and not-for-profit organisations, and the Digital Local Government program, which provides funding for local governments to encourage them to develop online services.

Around 21 extra Digital Enterprise services and 15 extra Digital Local Government programs will be provided with the additional funding.

The government has also allocated $4.9 million in NBN advertising for campaigns in Adelaide, Brisbane, Melbourne, Perth and Sydney.

This compares to $20 million in funding for a marketing campaign to dispel misconceptions about the NBN which was announced in the Mid-Year Economic and Fiscal Outlook.

Digital Dividend

A total of $26.6 million has been allocated to restacking digital television services to allow digital dividend spectrum to be used for other services. The funding will cover "unforeseen" implementation costs.

The government announced last week it failed to sell one-third of the 700MHz spectrum worth $1 billion in the Digital Dividend.

Total revenue for the auction made from the 700MHz and 2.5GHz spectrum was $1.96 billion, below the government's expectations.

Telcos can begin to use the 700MHz band on 1 January, 2015 and the 2.5GHz band on 1 October, 2014 after the bands are cleared of their existing users.

The Federal Government will also extend the Satellite Phone Subsidy Scheme until 30 June 2014 in $2.5 million in funding.

The subsidy helps Australians living and working in regional and remote areas to cover to the costs of a satellite handset.

The government said around 24,000 mobile satellite phone subsidies have already been provided through the scheme.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

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Tags budgetNational Broadband Network (NBN)

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