NBN Co has downgraded its target for gigabit-capable premises in the Australian Capital Territory from 57 percent to 50 percent, because it is more cost-effective to build in other parts of Australia.
As of the end of last year, 30 percent of premises in the Territory had fibre, which is higher than the national average of 20 percent).
But it also has “a relatively higher proportion” of premises on fibre-to-the-node (FTTN) – approximately 60 percent of premises, or 128,000 in real terms.
And while “approximately 50,000 of these FTTN premises in the ACT” were to be upgraded under NBN Co’s FTTN overbuild program, it appears that a year later, the number is lower.
NBN Co CEO Stephen Rue told senate estimates last night that the regional target for gigabit-capable premises in the ACT had been “57 or 58 percent”, but for a range of reasons – notably cost and access to funding – fewer premises would be made gigabit-capable than first anticipated.
“When we’ve looked at the cost of building out in the ACT, unfortunately there are premises elsewhere in the country that are more cost effective for us to build to,” Rue said.
“Unless there’s a change in the costs of building … we’re probably more looking at 50 percent [of premises in the ACT being gigabit-capable].
“We’ll certainly get to 50 percent.”
Rue said that network costs in the ACT were higher due to the amount of “backyard” infrastructure required, as well as a requirement to use Evoenergy poles, which could not support the additional cable loads as they now sit.
“Evoenergy would have to invest earlier than they would normally do to upgrade those poles,” Rue said, noting the source of funding for that is unclear.
One way that NBN Co has offset the cost of deploying infrastructure to less-economical areas is via co-investment schemes with state and territory governments, its arrangement with Victoria being a key example.
Rue said that option “is available to the ACT government”.
“It’s really in their hands if they want to come back to us and discuss co-funding,” he said.
A much harder route would be NBN Co trying to source the funding itself, with Rue noting that additional gigabit-capable expansion in the ACT did not meet commercial return criteria attached to its privately sourced debt funding.
“Because we’re borrowing so much money, as a government business enterprise, we’ve got to have a commercial return,” he said.
Asked whether NBN Co should try to purchase the TransACT VDSL2 network owned by TPG Telecom to gain infrastructure that could then be upgraded, Rue said there had been no attempts to do so, and he doubted it “would be permitted through the regulator” in any event.
“It is [also] quite expensive generally for us to ingest another network into our network,” he said, adding that “it’s not something that’s on the agenda.”