Tuesday, November 23, 2010

Australia's NBN Co Publishes Business Case Analysis

Australia's NBN Co published a 36-page business case document that sets out its key objectives and priorities over the next three years. The paper, which is based on detailed engineering, financial and business analysis conducted over the past 12 months, examines the process of designing, building and operating the National Broadband Network (‘NBN') and achieving the Government's objective of providing affordable superfast broadband to all Australians through structural reform in the Australian telecommunications industry.

NBN Co's charter is to build the next gen access network and then to provide Layer 2 wholesale services only. Larger retail service providers are expected to acquire Layer 2 products from NBN Co and use their own infrastructure to provide retail services to their customers. The fixed network will be supplemented by wireless and satellite technologies capable of delivering 12 Mbps or better to remote parts of Australia.

In its paper, NBN Co sets out the following four objectives:

1. The network should be designed to provide an open access, wholesale only, national network, covering all premises;

2. The technologies utilised should be fibre to 93 percent of premises (including Greenfields developments), fixed wireless to 4 percent of premises (delivering at least 12Mbps), and satellite to 3 percent of premises;

3. The pricing principles to be employed should ensure uniform, national wholesale pricing accessible on non-discriminatory terms; and

4. The network expected rate of return should be in excess of current public debt rates.

NBN Co. expects its total capital spending for the rollout will be AUS 35.7 billion.

Based on take up and speed usage growth assumptions, NBN Co. anticipates being able to reduce real prices for all products and nominal prices for all products, except the basic service offering, while maintaining an internal rate of return above the Government long-term bond rate.

In December, NBN Co. is hoping to finalise negotiations with on Telstra on the decommissioning of copper and hybrid fibre coaxial (HFC) networks and its infrastructure usage plans. Then in April 2011, NBN Co. anticipates launching its first customer trial on the mainland with a retail service provider partner.