Joint media release
The Hon Julia Gillard MP
The Hon Wayne Swan MP
Deputy Prime Minister and Treasurer
Senator The Hon Penny Wong
Minister for Finance and Deregulation
Senator the Hon Stephen Conroy
Minister for Broadband, Communications and the Digital Economy
Deputy Leader of the Government in the Senate
Government releases NBN Co Corporate plan
The Gillard Government today released NBN Co Limited’s Corporate Plan, which shows the National Broadband Network (NBN) will provide all Australians with world-class broadband on a financially viable basis at affordable prices.
The Corporate Plan shows taxpayers will get their investment back, with interest; the NBN will provide a rate of return significantly higher than the government bond rate; and all Australians will gain access to this state-of-the-art network.
The plan provides a range of detailed information on the rollout and costings of this important project including:
- NBN Co’s expected rate of return is 7.04 per cent, which compares favourably with the average 10 year bond rate (July 2009 to November 2010) of 5.39 per cent. The NBN Corporate Plan shows the Government can expect to recover all its funding costs with interest.
- There will be uniform national wholesale prices across NBN Co’s network which will provide a foundation for retail prices that will be both affordable and competitive.
- By June 2013, NBN Co is expected to have passed 1.7 million premises.
- As a wholly owned Commonwealth company, the Government will have overall control of the project during rollout and the flexibility to ensure outcomes are optimised for all Australians
- The total capital expenditure for the project is estimated to be $35.9 billion
- The Government expects to contribute $27.5 billion in equity for the rollout.
NBN Co will provide uniform national wholesale prices, with an access price for its basic service of 12mbps / 1 mbps across all technologies starting at $24 per month. The Government expects this will translate into retail prices that will be both affordable and very competitive.
NBN Co will also offer a range of wholesale pricing options, providing retailers with maximum flexibility to tailor their services to customers.
The Corporate Plan has been adjusted in recent weeks to take account of the Government’s response to the NBN Implementation Study, including the decision regarding the Points of Interconnect (POI) to the network that was informed by advice from the Australian Competition and Consumer Commission (ACCC).
The ACCC has advised that a semi-distributed network design would be the best outcome for competition and in the long-term interests of end users. Uniform wholesale prices can still be delivered under a semi-distributed POI approach.
The ACCC will closely monitor the level of competition on backhaul routes and address any failure in these markets to deliver competitive outcomes by using its new upfront price determination powers where needed.
Based on the ACCC’s advice, NBN Co’s internal rate of return has not been materially affected by the decision on POIs, as these changes mean that regional take-up is not likely to be significantly affected.
A key assumption of the Corporate Plan is the finalisation of the Definitive Agreements between NBN Co and Telstra.
The Government recognises that Telstra’s participation in the rollout of the NBN represents a major transaction delivering significant micro-economic reform.
Corporate Plans for Government Business Enterprises are not usually released to the public, however, the Government is keen to ensure Australians are provided with as much detail as possible on the nation’s largest infrastructure project.
In releasing the public version of NBN Co’s Corporate Plan, the Government has set the stage for significant advances on the NBN rollout in 2011.
Ubiquitous high-speed broadband is vital to productivity, jobs and long-term growth, and has the power to transform and strengthen Australia’s economy.
The NBN will deliver benefits, including improved delivery of healthcare and education, for all Australians, no matter where they live.
NBN Co’s Corporate Plan is available at: www.dbcde.gov.au/nbn
20 DECEMBER 2010
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