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Budget 2014 - NBN funding goes private after FY2017

Budget 2014 - NBN funding goes private after FY2017

Fate of NBN to be decided by 'market forces,' says IBRS analyst

The National Broadband Network will have to rely on private funding after the 2017-18 financial year, according to the 2014-15 budget released last night.

The government has announced it will complete its equity funding of the NBN by the end of the 2017-18 financial year.

The budget provides $20.9 billion in equity funding to NBN Co from 2014 to 2018. The government provided $5.2 billion in equity from 2008-09 to 2012-13 and $3.5 billion in 2013-14, and its total investment is capped at $29.5 billion.

That means the government funding will run out before the Coalition government’s 2019 deadline to have nine out of ten Australians with broadband speeds of 50 Mbps or more. The private sector will fund remaining costs.

The move to private funding is not a surprise, analyst Guy Cranswick told Computerworld Australia. “The intriguing question is the degree to which NBN is attractive to private investment after 2018.”

“There are several uncertainty factors; the economy after 2 to 3 years of weak growth, and the status of NBN at that time which involves even more elements. The government has signalled strongly in the budget that it will not assist with what it considers business.”

“It appears that whatever the circumstances of NBN in 2018-2019, it will be decided by market forces.”

Telecom analyst Paul Budde noted that "four years is an eternity in politics so that plan could change as many times as governments change."

More immediately, the recent switch to a multi-technology model "is making the project far less predictable and it will be a nightmare to weave that all in strategic plans and business plans," he said.

Read more: NBN Co renews Service Stream greenfields contract

"The project is now seeing some serious further delays because of that and this will put pressure on the team to work faster before they start running out of cash."

Also in the budget, the government said the NBN will support a $100 million Mobile Black Spot program to construct new telecom infrastructure to improve mobile coverage in outer metropolitan, regional and remote areas of Australia.

The program is aimed at enhancing both mobile coverage and competition. It is expected to result in 250 to 300 new or upgraded mobile base stations around Australia, the government said.

The government plans to open a “competitive selection process” in the second half of this year and announce locations selected for funding in the first half of 2015, said a joint statement by Communications minister Malcolm Turnbull and parliamentary secretary to the Communications minister, Paul Fletcher.

The first base stations funded by the program will roll out in the second half of 2015, they said.

“The programme will improve mobile coverage along major transport routes, in small communities and in locations prone to experiencing natural disasters, as well as addressing unique mobile coverage problems,” Turnbull and Fletcher said in the statement.

The program will rely in part on the NBN, they said, “for example, by seeking opportunities for towers in the NBN fixed wireless network to be used for colocation by mobile network operators to deliver mobile wireless services in the same location.”

The Victoria government has already committed $40 million to address mobile black spots and deliver Wi-Fi on selected trains in the state.

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

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Tags NBNMalcolm Turnbullnational broadband networkbudgettelecomfundingmobile black spot

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