UPDATED: A new report prepared by KPMG and McKinsey reveals that the National Broadband Network could cost as little as $38 billion to implement, and not the $43 billion originally touted.
Released today by the federal government, the report also claims that the network could break even within 6 years, without involving Telstra, however, it concludes that if Telstra were involved that costs could fall significantly.
Shortly after the report was released, the National Broadband Network website crashed, with journalists unable to access information.
The report urges the government to strike a deal with Telstra claiming that, it would save greatly on capital expenditure however they do warn about locating gear in Telstra exchanges.
The report writers from KPMG and McKinsey claim that critical infrastructure needed for the network would be significantly more cost effective if a deal was struck with Telstra.
The report says that $26 billion will be needed to fund the new network over the next seven years and that the government can expect to see a return of 6 to 7 per cent on its investment over 15 years.
Among its 84 recommendations it has also urged the Government to increase its rollout of the fibre-to-the-home network from 90 per cent to 93 per cent of Australian homes.
And it says the network should be wholesale only and stay Government owned until the rollout is complete.
It has not put a price on what the cost would be to the consumer, saying that will be dictated by the market, but it says the network will be competitive because people will want to pay for the high speed it offers.
But it says entry-level wholesale prices would be around $30 to $35 a month for a basic service.
Since the Government announced its plans last year questions had been raised as to whether it was commercially viable.
But Communications Minister Stephen Conroy says the report has showed the project is achievable.
The projects would deliver a connection of 100 megabits a second to homes, which is 100 times faster than current speeds.
Communications Minister, Stephen Conroy, released the report this afternoon and is to hold a press conference shortly. His department claims that the key findings of the report are as follows.
·The NBN will deliver world class broadband infrastructure to all Australians
·The $43 billion total capital cost of the NBN is a conservative estimate and there are opportunities to significantly reduce the build cost
·The peak investment required by Government is estimated at $26 billion by the end of year 7, of which $18.3 billion will be required over the next four years
·Government should retain full ownership of the NBN until the roll out is complete to ensure that its policy objectives are met – including its competition objectives
·The fibre component of the NBN should be extended from 90 to 93 per cent and cover the 1.3 million new premises expected to be built by 2017-18
·Entry level wholesale prices on the fibre should be set at around $30-35 per month for basic broadband 20Mbps plus voice service, to drive affordable retail prices and better value for money for consumers compared to what is available today
·Fibre to the premise is widely accepted as the optimal future proof technology with wireless broadband a complementary rather than a substitute technology
·Next generation wireless and satellite services will deliver peak speeds of at least 12 Mbps (and much higher for many wireless users). Satellite services will deliver average data rates which are more than 20 times higher than most users of these technologies experience today and much higher than average DSL usage today
·NBN Co can build a strong and financially viable business case with the Study estimating it will be earnings positive by year six and able to pay significant distributions on its equity following completion of the rollout; and
·The Government can expect a return on its equity investment sufficient to fully cover its cost of funds.
More to follow.
