The National Broadband Network will take over nine years to construct and annual revenue is forecast at $5.8 billion by 2021, according to the network’s business plan announced by Prime Minister Julia Gillard and communications minister Stephen Conroy this afternoon.
Gillard said the business case “confirms the NBN can be delivered for a lesser cost than originally thought”, and that it will deliver economic benefits to the tune of 1.3% of GDP. The plan also estimates a take-up rate of 70%.
Gillard also said the NBN will be accessible to over 1.7 million premises by June 2013, with usage of those expected to be at 600,000 premises. Over 13 million premises will be able to access the network by 2021.
At the peak of construction, nearly 6,000 premises will be connected to the network every day.
The entire project will record positive operational earnings by 2018, with a positive net income by 2021.
The Government will also put up $27.5 billion in equity, while it will borrow $13.4 billion between 2015-2021, with the total equity and debt funding to come to $40.9 billion.
NBN Co. chief executive Mike Quigley also said some estimates of rate of return and take-up were “conservative”.
“The growth in demand for speeds will be considerably lower than the extrapolation of increasing speeds implied by the history of internet access technologies,” the full plan said.
Quigley also said negotiations are ongoing with Telstra.
Uniform wholesale access prices will be set at 12Mpbs, (1Mpbs upload), of $24 per month. The Government will require equity of $27.5 billion, with the network to record positive earnings from the 2018 financial year, with positive net income to come from the 2012 financial year of 2012.
The paper also outlines some examples of costs consumers can expect to pay, with one 50GB plan on a 12MB connection to cost between $53-58 per month.
However, Quigley said that pricing can expected to fall over time.
The Government has also accepted the advice of the Australian Competition and Consumer Commission, with more POIs to be distributed than the original 14 proposed, and that wholesale uniform pricing will be used – these updates are reflected in the new rate of return, which is set at just over 7%.
The ACCC said in a statement today the Government had accepted its advice, with the National Broadband Network Company identifying a list of 120 initial points of interconnect as meeting the ACCC’s criteria.
That list of POI locations will be subject to a public confirmation process.
Gillard said in the announcement today that, “the business case confirms the NBN can be delivered for a lesser cost than originally forecast, the total capital investment necessary is less than originally forecast, and the NBN can be delivered at a rate of return”.
The Australian Information Industry Association has welcomed the NBN business plan, with chief executive Ian Birks saying that, “This release is an essential step towards the development of business confidence in the digital economy and the development of new business models.”
“It will allow the business community to gain a clearer understanding of emerging opportunities and form the basis for much stronger engagement between the business and technology sectors.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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