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Labor claims NBN Co’s HFC delay could cost taxpayers millions

Labor claims NBN Co’s HFC delay could cost taxpayers millions

Labor claims the delay could cost anywhere from $420 million to $790 million

NBN Co’s decision to pause the rollout of its hybrid-fibre coaxial (HFC) network to fix service issues could cost Australians up to $790 million, according to the Australian Labor Party’s Shadow Minister for Communications, Michelle Rowland.

Rowland and Labor’s Shadow Minister for Finance, Jim Chambers, claimed in a joint statement that the delay could cost anywhere from $420 million to $790 million, based loosely on analysis laid out in NBN Co’s own 2016 Corporate Plan.

“These figures, signed off by the NBN Board and Shareholder Ministers, clearly state a seven month delay in the HFC activations profile would have a $1 billion impact on rollout funding,” the joint release by Chambers and Rowland stated.

The $1 billion figure was based on a seven-month delay, for three million services, each claiming an average revenue of $47 per month.

Indeed, delays in HFC product launches was flagged in the 2016 Corporate Plan as one of several critical sensitivities that could impact NBN Co’s peak funding for the network’s rollout, according to scenario analysis of key sensitivities.

According to Labor's reckoning, the scenario analysis in NBN Co's 2016 Corporate Plan assumed that 75 per cent of four million HFC premises would be delayed by seven months. 

Therefore, 75 per cent of two million homes being delayed for 6 months at $47 per month would equate to $423 million. This is Labor's lower range estimate. 

At the same time, 75 per cent of 2.5 million homes being delayed for nine months -- the upper range of NBN Co's estimated delay timetable -- at $47 per month comes to around $793 million, representing Labor's upper estimate.

However, it remains to be seen if the figures claimed by the Federal Labor opposition members stack up. 

It should be noted that NBN Co chief, Bill Morrow, has indicated that it is too early to tell precisely what financial impact the delay is likely to cause.

“[NBN Co] is still working on our revised financial forecasts following our decision to temporarily pause sales on the HFC network," a representative for the company told ARN.

The claims follow the announcement on 27 November by the company behind Australia’s national Broadband Network (NBN) rollout, that it will temporarily pause all new orders over its HFC access network as it works to improve service standards across the network.

While NBN Co hopes to address a number of process-based issues that have seen lengthy connection and service times for end customers, it also wants to fix network problems that have been affecting the HFC infrastructure specifically.

“We are seeing, for a minority of the customers, drop-outs. And we’ve been investigating this for some time, and just recently over the last week we discovered that there are a number of things we can do with the network to be able to lift that quality of service,” Morrow said at the time.

The HFC network rollout pause is expected to result in a six to nine-month average delay for those people that have yet to connect to the NBN over Telstra’s legacy HFC network.

"We’re going to work through a number of issues, focused primarily on those customers that already have the service today, and once that is complete, we will advance those improvements to the future areas continuing with the rollout sequence that is already within out systems," Morrow said.

NBN Co has noted that its current Corporate Plan calls for nearly three million premises to ultimately be served by HFC access technology. At present, nearly one million premises are ready to connect with 370,000 having done so already.

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Tags NBNnational broadband networkhfcLabor

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