NBN Co. to deliver business plan to Government by November

NBN Co. chief executive Mike Quigley has said the company will hand over a report to the Government next month that will detail more information on wholesale pricing and information on how retailers can connect to the network.

The report could play a crucial part in the Government’s defence of the network, as communications minister Stephen Conroy continues to come up against criticism for refusing to release a cost-benefits analysis. New information on wholesale pricing could play down those concerns.

But the announcement of the NBN Co. report also comes as Government officials and other experts have defended the NBN ‘s economic credentials, including ACCC chairman Graeme Samuel, telco giant Optus and Victorian ICT minister John Lenders.

Quigley said at the CommsDay event yesterday the NBN Co. will deliver a three-year plan that will incorporate wholesale pricing, to be delivered by the end of next month.

“We’re submitting a plan to the Government at the end of this month,” Quigley said. “The Government may decide [we need] to modify it this way or that way.”

Quigley also said the report will, “put back into the Government” information on “points of interconnect” for the network, which he says will provide significant information for retailers.

“Our intention is to have uniform pricing between a point of interconnect and a premise,” he said. “Where you put those points has an effect on industry structure and the overall retail pricing that can be delivered”.

Ovum research director David Kennedy says these “points of interconnect” are physical joints where retailers can connect to the network. He says businesses will be very interested to know exactly how many of these points will exist and the overall pricing.

“To use the network the NBN Co. is building, operators are going to have to connect to these joints, known as points of interconnect. But there isn’t going to be one single point, there will be at least a couple of hundred.”

“These points are important and change the options access seekers have to differentiate themselves,” he says.

Kennedy says that if too many of these points of interconnect exist, the harder it is for retailers to reach those points and provide a truly national services. However, he also points that if too few of these points exist, the fewer options access seekers have to offer their services.”

“I can’t speak as to what’s going to be in this report. Clearly the NBN Co. will be developing a business plan and there will be some assumptions in there, and research underpinning those assumptions about revenue and so on. But absolutely, the number of points of interconnect is something retailers will be interested in.”

Quigley said the report will be released to the Government following months of discussion with the Australian Competition and Consumer Commission. He also said the plan will include full details of the wireless and satellite rollouts, and that the company is finalising test sites for these connections.

He also defended the time it has taken for the Government to produce the review, saying that, “a business case over something that spans this length of time is quite difficult to do”.

“It means you may need to make assumptions, and the assumptions we made are different from the assumptions the Implementation Study folks made. We were, overall, probably more conservative in areas related to usage and pricing.”

The comments come after several key officials have defended the NBN, including the length of time it has taken for the Government to deliver a business plan. ACCC chairman Graeme Samuel told Business Spectator the commercial returns of the network can’t yet be measured.

“I don’t think there is anyone in the country or in the world that will be able to tell you the benefits flowing from a high-speed broadband network five or 10 years out, let alone 20 or 30 or 40 or 50 years out,” he said.

“And therefore when people talk about social cost-benefit analyses or cost-benefit analyses, I think that their failure to understand that what we’re talking about here is a visionary project much like the Snowy Mountains Scheme,” he added.

He also said the report to be delivered by Quigley and NBN Co. will deliver information on anticipated revenues, cost of capital and cost of debt.

Meanwhile, Optus head of Government Maha Krishnapillai said in a radio interview yesterday the company believes the NBN is economically viable.

“We have done a lot of modelling on this, we’ve been through NBN Mark 1, we’ve been through years of modelling and work on this with the government and we know that the NBN, as it is characterised now, is commercially viable.”

Victorian ICT minister John Lenders also defended the NBN’s economic credentials yesterday, saying the “economics are sound”.

He also claimed that for every SME that connects to a high-speed broadband connection, that same businesses receives a $5,000 savings in productivity.