Revised NBN plan knocks price tag to $39.3b

John C. Tanner
21 Dec 2010

Australia’s National Broadband Network (NBN) project will cost slightly less than expected but will take three years longer to build and may come with basic retail connections priced at almost $50, according to its business plan released Monday.


The NBN Co. business plan, released by Communications Minister Stephen Conroy in Canberra, says the NBN project will cost A$39.5 billion ($39.3 billion), down from the previous price tag of A$43 billion.


The plan estimates that total equity and debt funding for NBN would be A$40.9 billion. The government will provide A$27.5 billion in equity, and NBN will borrow A$13.4 billion from financial markets between 2015 and 2021.


The plan also projects an internal rate of return of 7.04%, assuming 70% take-up of the service by 2025, and its first profit by 2021.


The plan also involves changes in the network design, with NBN Co agreeing to adopt recommendations from the Australian Competition and Consumer Commission (ACCC) that the network include at least 120 Points of Interconnect (POI) in a semi-distributed architecture.


The original design incorporated just 14 POIs in a centralized architecture, which NBN Co had said would minimize wholesale input costs for access seekers, eliminate a single point of failure along the fiber distribution hub and provide rapid traffic growth in all backhaul links.


However, the ACCC objected to the centralized POI plan due to competition concerns.


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