NBN Co Fixed Wireless and Satellite Review
7 May 2014
The Hon Malcolm Turnbull MP
Minister for Communications
Senator the Hon Mathias Cormann
Minister for Finance
The Australian Government notes that NBN Co has today released its Fixed Wireless and Satellite Review, in line with the Government's commitment to delivering improved broadband services to all Australians as quickly and cost-effectively as possible.
The Review provides a pathway to delivery of regional and remote services in the non-fixed line footprint, which will provide the best possible product to end users within the available funding.
Given this Government's commitment to increased transparency during the rollout of the National Broadband Network (NBN), we are happy that NBN Co is releasing this Review today in full, except for redactions of material that is legally and commercially sensitive.
The Review estimates that the cost of providing improved services to all Australians in the non‑fixed line footprint is approximately $1.3 billion higher than that outlined in the 2012–15 Corporate Plan that was released by the former Government. Estimated costs are in line with the high level assumptions made about the non-fixed footprint in the Strategic Review 2013 and will not affect the Government's $29.5 billion equity investment in the NBN Co.
Following the NBN Co December 2013 Strategic Review, NBN Co began a detailed review of its fixed wireless and satellite programs. The Review was undertaken by the NBN Co Board and provides the Government with commercial and strategic options to deliver our broadband policy objectives to Australians outside the fixed line footprint.
Following a tender process, NBN Co appointed the Boston Consulting Group to provide an independent assessment and undertake a review of the architecture, rollout options, products and service delivery models for fixed wireless and satellite, as well as to review industry partnership options and revenue. All forecasts and assumptions have been arrived at by NBN Co and its independent expert advisor.
The Review has identified a set of critical issues with the performance to date of the fixed wireless and satellite programs:
- Based on the 2012–15 Corporate Plan infrastructure and revised take-up estimates, approximately 200,000 premises would not be able to be served in the non-fixed line footprint.
- NBN Co does not currently hold spectrum rights in urban-fringe areas, which drives approximately 80,000 of the coverage shortfall of 200,000 premises.
- The timeline in the NBN Co satellite program has a substantial level of risk. Prudent planning of the service commencement would indicate delivery later in 2015 or early 2016.
- The long-term satellite service needs a more robust product construct to more effectively manage satellite capacity.
- The fixed wireless program is currently behind the build targets set out in the 2012–15 Corporate Plan although NBN Co's forecasts suggest it will meet its revised 30 June 2014 activation targets as set out in the December Strategic Review.
- NBN Co's previous organisation structure inhibited visibility and effective decision-making across fixed wireless and satellite programs.
If NBN Co pursues the preferred scenario outlined in the Review, initial assessment suggests the mix of technologies in the “last eight per cent” of premises in 2021 may be:
- Fixed wireless to 57 per cent of premises.
- Satellite to 40 per cent of premises.
- FTTN to 3 per cent of premises.
Importantly, the high-level assumptions align with those made about the non-fixed line footprint in the December 2013 Strategic Review. This means that there are no further changes to the peak funding requirements if NBN Co were to implement the recommended approach.
The Review also explored partnership opportunities in both the fixed wireless and satellite networks. While noting there was limited benefit to NBN Co pursuing any change to ownership arrangements, and increased risks to the programs in making such changes at the present stage of roll-out, the Review noted there were opportunities for discussion with industry regarding partnerships in the future.
The Review contains a series of next steps, including:
- pursuing multiple pathways to securing spectrum
- stabilising the fixed wireless build program and driving cost reductions
- implementing additional actions to mitigate risks in the satellite program
- defining the details of the satellite product, and
- working with industry to identify tower sharing opportunities and support the Mobile Coverage Programme.
The advice contained in the Review is being considered by the Government and will assist in the Government's consideration of the NBN Co Corporate Plan, due to be submitted and considered later this year.