[AusNOG] NBN 3 year construction plan

[Mark Newton]

On Oct 16, 2015, at 9:54 AM, Bruce Forster <bruce at tubes.net.au> wrote:

> Hey Noggers,
> Not sure if you guys had seen this but i haven't seen it posted so...
> http://www.nbnco.com.au/learn-about-the-nbn/three-year-construction-plan.html?cid=vanity:3yearplan <http://www.nbnco.com.au/learn-about-the-nbn/three-year-construction-plan.html?cid=vanity:3yearplan>
Until they solve the fact that the Govt has said they’re providing $29.5 billion for a network NBNCo’s corporate plan says will need peak funding of between $49 billion and $59 billion, any of their construction plans should be taken with a grain of salt.

Their outside capital requirements are supposed to resemble something like a bell curve (where the first half ramps up as their construction efforts increase, and the second half ramps down because they’re paying down debt from revenues earned from the bits of the network they’ve already built). The peak funding requirement is the top of that bell curve, which will be about half way through their build cycle.

Can they access non-Government investment capital? The corporate plan says their current internal rate of return estimate is 2.7% to 3.5%, which is probably too low to attract $20 billion worth of private investment (if I wanted a boring low-yield investment for my $20 billion, I’d look at something like a listed property trust, which yields about 5%. Treasury bonds at 3.1% are bang on the middle of the Corporate Plan’s guidance, and zero risk. So why would I put my money into the NBN?)

So unless the Government changes their policy and agrees to almost double their contribution, I reckon NBNCo will run out of money in 2017/18, and won’t be able to complete the construction plan they announced today.

If you assume that the real purpose of the NBN is to be a club the Government of the day can use to bludgeon its political opponents about how awful they are at fiscal discipline and service delivery, then it scarcely matters whether any individual implementation plan is successfully executed. Next year there’ll be another one, slightly different, with a longer timeframe due to "unforeseen challenges." Year after that, after another election, there’ll be a totally different one, with a new deadline. 

Somewhere in Australia is a person living in the very last house in the nation that’ll get an NBN connection. The poor sod still has no idea when that’ll be.

  - mark



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