The Prime Minister Julia Gillard claims the 12MBPs basic service delivered by the new NBN network will be faster than 12 MBPs that is currently being delivered by ISP’s today.
Speaking at a Canberra press conference, the Prime Minister said that she was confident that the Australian public will get a return on their invest in the NBN in the long term and “a significantly better return than what long term Government Bonds are delivering” she said.
Her comments are based on the NBN delivering an internal rate of return of 7 per cent which NBN Co boss Mike Quigley admitted was a lower rate of return for his NBN business case than might be expected in a commercial business plan.
The basic plans includes internet services, fixed line voice services, and with a 12Mbps download speed will be on offer by the wholesale fibre network for $24 a month which for most households could result in ISP’s charging up to $50 a month for the most basic of services.
The cost of the project has climbed $200,000 to $35.9 billion, with $27.5 billion in government equity and another $13.4 billion expected to be leveraged in debt from 2015.
The increased cost of building the project was driven by a key ruling from the Australian Competition and Consumer Commission, who rejected NBN Co’s proposal to have 14 points of interconnection in capital cities. This is now expected to climb to 120 points nationally.
108-130 POIs will be established in mainland cities and 81 POIs in regional Australia and six in Tasmania.
Communications Minister Stephen Conroy said that the network will take nine and a half years to roll out, with 5,900 premises a day being connected the NBN in the future.
Revenues are expected to reach $5.8 billion by 2021 with the Government looking to go to the capital markets by 2015 to raise $13.5 Billion.
The problem for the NBN is their assumptions of a 7 per cent return is based on a 70 per cent take up rate by businesses and homes which is extremely high according to analysts.
The NBN will deliver fibre to the home for 93 per cent of the nation, with the remaining seven per cent of premises to be covered by either wireless or satellite, the plan predicts.
Specific targets for the rollout of the yet-to-be-built network were also included in the business plan which was released alongside the corporate watchdog’s advice to government.
All of these predictions and plans remain dependent on what NBN chief Mike Quigley described as the “consummation” of the deal between NBN Co and Telstra.
Mr Quigley told reporters discussions with the nation’s largest telecommunications provider would continue throughout the Christmas break.
“I spoke with (Telstra boss) David Thodey this morning,” Mr Quigley said.
