by Bonnie Gardiner

NBN exceeds targets for FY2015

Aug 24, 2015

NBN Co today announced it had exceeded its targets for FY2015 by doubling the number of serviceable premises, the number of active end users, and telecommunications revenue in the 12 months to 30 June 2015.

During the 2015 financial year, the number of premises that can order a national broadband network (NBN) service grew from 553,000 to 1.2 million, while the number of homes and businesses with an active NBN service more than doubled, from 210,000 to 486,000.

Currently around one in 10 Australians can access the NBN, with plans for 75 per cent to be able to access the high-speed network by June 2018.

The size of the rollout footprint will almost double every year for the next three years, with more than 2.6 million premises ‘ready for service’ by the end of June 2016, according to the 2016 NBN Co Corporate Plan released on Monday.

NBN Co also claimed its recent progress had contributed to Average Revenue Per User (ARPU), increasing from $37 to $40 per month. The increase has led to growth in capital expenditure to $3.3 billion.

The new funding requirements of the company’s multi-technology model (MTM) approach has led to a peak funding requirement of between $46 billion and $56 billion – up from the estimated $41 billion in December 2013 – with a base case of $49 billion, according to the company’s Corporate Plan released on Monday.

With the total government equity contributions still capped at $29.5 billion, NBN Co will need to raise at least $15 billion, and up to $26.5 billion, to achieve successful rollout with new estimations. NBN Co said it had received $13.2 billion in equity funding at end of financial year 2015.

Multi-technology model

The company claims to also be advanced in its transition to its MTM approach, including the use of Hybrid Fibre Coaxial (HFC).

Throughout FY2015, NBN Co conducted a successful trial of HFC technology, procured HFC equipment and outlined a blueprint to upgrade the entire HFC footprint to the DOCSIS 3.1 standard, it said.

The Australian Competition and Consumer Commission (ACCC) delivered a draft decision last month approving NBN Co’s plans to integrate parts of Optus’ HFC cable network and to progressively migrate its HFC customers onto the NBN network.

The decision followed the final approval of an $11 million deal with Telstra that allowed NBN Co to progressively take ownership of Telstra’s copper and HFC network assets.

NBN Co estimated that HFC will represent about 30 per cent of the 8 million connections expected to be reached by the fixed line portion of the NBN.

Along with HFC, fibre-to-the-node (FTTN) and fibre-to-the-building (FTTB) will comprise the majority of the new-look NBN.

NBN Co is also taking ownership of elements of Telstra’s copper network in order to roll out FTTN services. The company has already completed construction for the first 200,000 FTTN premises with plans to finalise the launch its FTTN product in the coming months.

The company has also carried out the commercial launch of its FTTB product.

The company has continued to expand its fixed wireless footprint and piloted the delivery of wholesale speeds of up to 50 Mbps to users – up from the original offering of 25 Mbps – with a full commercial launch expected toward the end of 2015.

The first of the two dedicated NBN satellites – ‘Sky Muster’ – is scheduled for launch on 1 October 2015, with commercial services scheduled to come online progressively from the second half of the 2015-2016 financial year.

Achievements and risks

NBN Co CEO Bill Morrow said in a statement that the achievements of the past 12 months gave the company confidence it can continue to accelerate the build.

“This will help us to meet our goal of ensuring that every home and business in Australia can receive fast broadband by 2020 so we can spur the digital economy and close the digital divide,” said Morrow.

“These achievements come as a direct result of refinements we have made to the organisation, including improved business processes, the resetting of relations with our delivery partners and increasing employee morale.”

As the NBN remains the largest and most complex infrastructure project ever undertaken in Australia, Minister Turnbull and Minister Cormann claim despite positive results, its risk profile is still significant.

In its 2016 Corporate Plan, NBN Co has modelled a range of possible scenarios that, if they were to eventuate, would add $1 billion to its overall peak funding requirement.

These risks include failing to meet the company’s take-up target in the fixed-line footprint by 5 per cent, a potential seven month delay in either its FTTN or HFC product launches, and a failure to meet its target increase in the average revenue per user by $3.