TECHNOLOGY SPECTATOR – NBN Buzz: A double-edged report card

Hype around the new network has reached an all time high while NBN Co's latest report on the rollout has revealed some bittersweet results.

Technology Spectator

NBN Buzz is a weekly wrap up of everything that's going on with Australia's largest infrastructure project. For previous editions and the latest news visit our NBN Buzz page.

Has there ever been a time when so many Australians were talking about the NBN? From coast to coast people are either celebrating the inclusion of their suburb on the three-year rollout schedule or bemoaning the fact that they have missed out. And it’s not just the public that’s excited, MPs across the board are keen to ensure that their electorate doesn’t miss out on the network. With so much enthusiasm on tap it’s almost hard to remember the Coalition’s call that the Australian public doesn’t want or need a NBN.

The claims by Malcolm Turnbull and Liberal MP Paul Fletcher that the rollout was an exercise in political favouritism were not entirely surprising. In fact it was exactly the sort of reaction that the rollout was going to elicit from the opposition, however, they also highlight the inherent hypocrisy of the Coalition’s position. Do we really expect Turnbull or other Liberal MPs to not get connected when the network comes knocking? I think not.

NBN Co has maintained that the geography of the rollout always has and will continue to be dictated by technical necessities and given the enormous task ahead of them it’s unlikely that the engineers have had much time poring over electoral maps.

The real political value for the Gillard government isn’t in carefully masterminding who gets the network and who misses out but rather in promoting the fact that the NBN is on its way to becoming a reality for millions of Australians. A reality that the Coalition will ostensibly will turn to dust once it gets to power.

Of course there is no guarantee that the Coalition will do any such thing and we will probably get a clearer picture the closer we get to the federal election.

NBN Co's latest report card

Meanwhile, there was plenty of other stuff for the opposition to crow about thanks to the NBN Co's 2011 report card. The six-monthly report to the end of December 2011 released by the government on Tuesday shows that NBN Co posted revenue of $356,000 during the period.

The revenue has started rolling in courtesy of retail service providers that have started to make payments to NBN Co since it commenced billing for commercial services in October. Of course it pales in comparison to the operating loss the company racked up during the same period, which comes to the tune of around $220 million. This included $101 million in employee-related expenses, $40 million for IT and facilities expenses and $29 million for external services.

The performance report also showed that NBN Co has received almost $2.5 billion from the federal government since its inception. It had $1.1 billion cash at December 31 last year and is set to receive $2.8 billion in equity funding this year. That’s a lot of zeros folks, but there’s nothing here that most of us don’t already know. You can’t build this sort of infrastructure for peanuts and the fact that NBN Co isn’t profitable right now should surprise no one.

However, the numbers do get a bit more problematic when you look at the number of homes connected to the network. According to the report, while the NBN Co had received almost 3000 applications (covering 109,988 lots) from developers requesting the network be rolled into new housing estates, only 110 customers had signed up to receive the service. It’s an opportunity that Malcolm Turnbull has gleefully embraced and while the overall numbers (satellite, brownfields) are a little healthier there’s no denying that the rollout is well behind schedule. According to the report NBN Co had connected 951 homes at the end of December and, as Turnbull points out, that’s 0.3 per cent of houses that were scheduled to be connected by June 2011.

This is one area where there really is plenty of room for improvement for NBN Co. The progress so far has been hampered by long regulatory processes but NBN Co boss Mike Quigley and the Gillard government will have nowhere to hide if the numbers aren’t better at the next report card.

SAU jitters

One thing about the number crunching associated with every NBN progress report is that it usually fades into the background pretty quickly. However, the one issue that is just about ready to take centre stage is NBN Co’s special access undertaking (SAU) which sets out how the company will operate in the fixed-line regulatory environment for the next 30 years. The telcos have all railed against the lack of regulatory oversight with some saying that they were rushed into signing the wholesale broadband agreement (WBA) and iiNet's chief regulatory officer Steve Dalby telling ZDNet Australia that a 30-year agreement set in stone is just too long.

There is an obvious element of brinkmanship at play here with the telcos using their last opportunity to derive as much benefit as they can. The ACCC is almost certainly going to give the SAU its blessings by the end of this month but that hasn’t stopped NBN Co to relay assurances to the telcos. According to ZDNet Australia, the company has told retail service providers (RSPs) that the competition watchdog will have ample authority to mediate contract negotiations between itself and the telcos.

New customer centre and NBN Co's get-out-jail card

In other news, NBN Co is all set to launch a new customer contact centre on the Gold Coast by the second half of 2012, to handle the rising tide of NBN-related queries from the public. The centre will be located in the suburb of Varsity Lakes and will also provide over 100 jobs.

Meanwhile, ZDNet’s Josh Taylor has rummaged through NBN Co’s six month performance report to reveal the company’s acquisition of 850MHz of spectrum from AAPT in the 28GHz spectrum band for its satellite service. According to the report, NBN Co picked up the spectrum in November. As it turns out the company’s lips are sealed with regards to how much money changed hands in the transaction. Its excuse, you guessed it, ‘commercial sensitivity’. That old chestnut, which has so far been a handy out for NBN Co whenever you ask it for any information.


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