NBN is achievable and affordable: McKinsey

NBN is achievable and affordable: McKinsey

Let the broadband politics begin

A study on the National Broadband Network (NBN) implementation, released by the Federal Government, confirms that high-speed broadband for all Australians is achievable, and financially viable — with or without the participation of Telstra.

The report, prepared by McKinsey & Company and KPMG, contains 84 recommendations for the government about the NBN, covering aspects such as the technology, financing, ownership, policy framework, and market structure.

Key findings and recommendations include:

  • The NBN will deliver world class broadband infrastructure.
  • 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 rollout is complete to ensure that its policy objectives are met, including its competition objectives.
  • The fibre component of the NBN should be extended from 90-93 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 about $30-35 per month for basic broadband 20Mbps plus voice service, to drive affordable retail prices and value for money for consumers.
  • 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 12Mbps. 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.
  • The study estimates estimates NBN Co will be earnings positive by year six and able to pay significant distributions on its equity following completion of the rollout
  • The Government can expect a return on its equity investment sufficient to fully cover its cost of funds.

The widely-anticipated study has been in the pipeline for seven months. Minister for Broadband, Communications and the Digital Economy, Stephen Conroy, said in a statement more than 140 stakeholders were consulted over the course of the study.

"The study confirms that the NBN business model establishes that taxpayers are paid back their investment with a modest return by year 15 of the project on the basis that privatisation is completed,” he said.

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Tags NBNNational Broadband Network (NBN)KPMG McKinsey Implementation Study

More about etworkFederal GovernmentKPMGTelstra Corporation

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