The federal government’s announcement of a plan to deliver super fast internet by fibre to millions of homes and businesses is an admission it got it wrong the first time round, the former NBN boss says.
Communications minister Paul Fletcher on Wednesday unveiled the NBN’s Corporate Plan, which contains $3.5 billion for network upgrades that will extend the NBN’s fibre footprint, including access to fibre-to the-premises (FTTP), to millions of homes and businesses.
“An increasing number of premises connected to the NBN by FTTN technology that require higher speeds will be able to access higher wholesale speed tiers via Fibre-to-the-Premises (FTTP) technology,” the NBN said.
It comes seven years ago after the government pooh-poohed Labor’s plan for a fully FTTP network and opted for a Multi-Technology Mix network instead.
Mike Quigley, who was CEO of the NBN between 2009 when it was first established and 2013, said the announcement was an admission the government had placed a losing bet on old technology based on flawed assumptions.
“The announcement by NBN Co confirms that when the Coalition placed a bet on using the old copper and pay TV technologies to build the NBN they made a very big mistake, and they lost that bet,” he told ABC Radio National on Thursday.
“The decision-making in 2013 was flawed. It was based on the wrong assumptions and premises.”
The government underestimated the need for high speed internet, Mr Quigley said.
“At that time there were consultants reports which said 50 per cent of people wouldn’t need more that 15 Megabits per second by 2023 – that’s how badly wrong they got it,” he said.
“It was always going to be the case that Australians in the end needed a proper fixed fibre network.”
Mr Quigley said other telcos around the world had achieved dramatic reductions bills by going with FTTP around that time. This included NZ’s Chorus which managed a 44 per cent reduction in FTTP bills, he said.
Australia was now essentially building two networks, which was a very expensive way of doing things, and he said the cost could now blow out by about $12 billion from original estimates.
“Yesterday’s annoucement is probably going to lead to peak fundng of around $57 billion,” he said.
He said users would also end up paying higher prices for the faster technology.
“If you had built the original FTTP network the costs would be lower than what they are now because it’s basically been done twice, which means you didn’t need to recover as much from end users.”
Mr Quigley said NBN Co has lost possible revenue streams and become a less attractive sales prospect by not originally going with FTTP, as it could have been selling been selling fibre services to mobile suppliers as 5G rolled out .
“Once the decision was made to use the old copper and pay TV networks the NBN network became much less attractive as a sale proposition. It would have been a very attractive proposition if the FTTP build had been allowed to proceed in 2013,” he said.
The NBN was billed at the time as the biggest infrastructure project in Australian history when it was first announced by Labor in 2007.
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