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Australian govt. broadband bill to peak at $26b

06 May 2010

The Australian government’s investment in a fibre to home broadband network is likely to peak at $26 billion, it was revealed in the National Broadband Network (NBN) Implementation Study released today.

The goal of the government’s NGN roll out is to provide 100Mbps to 90% of premises and 12Mbps everywhere else using wireless and satellite solutions. The implementation study was carried out by McKinsey & Company and KPMG and took seven months with 140 industry stakeholders consulted. It was completed in March, but the Australian government has taken two months to make it public.

In a press release issued by Minister Conroy’s office it provides the following key findings from the report:

  • The NBN will deliver world class broadband infrastructure to all Australians;
  • The $43 billion total capital cost of the NBN is a conservative estimate and there are opportunities to significantly reduce the build cost;
  • The peak investment required by Government is estimated at $26 billion by the end of year 7, of which $18.3 billion will be required over the next four years;
  • Government should retain full ownership of the NBN until the roll out is complete to ensure that its policy objectives are met – including its competition objectives;
  • The fibre component of the NBN should be extended from 90 to 93 per cent and cover the 1.3 million new premises expected to be built by 2017-18;
  • Entry level wholesale prices on the fibre should be set at around $30-35 per month for basic broadband 20Mbps plus voice service, to drive affordable retail prices and better value for money for consumers compared to what is available today;
  • Fibre to the premise is widely accepted as the optimal future proof technology with wireless broadband a complementary rather than a substitute technology;
  • Next generation wireless and satellite services will deliver peak speeds of at least 12 Mbps (and much higher for many wireless users). Satellite services will deliver average data rates which are more than 20 times higher than most users of these technologies experience today and much higher than average DSL usage today;
  • NBN Co can build a strong and financially viable business case with the Study estimating it will be earnings positive by year six and able to pay significant distributions on its equity following completion of the rollout; and
  • The Government can expect a return on its equity investment sufficient to fully cover its cost of funds.

See also: Australian and NZ broadband rollouts compared