The Abbott government will break its NBN election promise of giving all Australians access to 25 megabits per second download speeds by 2016, Communications Minister Malcolm Turnbull admitted in Parliament on Thursday.
The news came as Mr Turnbull released a major strategic plan into the NBN, which showed the national broadband network could never have been completed on time and on budget.
It also comes a fortnight after Fairfax Media revealed that advice given to the government in its draft report for the incoming government showed the NBN Co did not believe the target was achievable.
When launching the Coalition’s NBN policy before the election, Mr Turnbull and Tony Abbott made the signature promise that by the end of 2016 all Australians would have internet download speeds of between 25 and 100 megabits per second.
“Disappointingly”, this would no longer be possible, Mr Turnbull told the Parliament on Thursday.
The review by NBN Co itself and Boston Consulting and the insolvency specialist KordaMentha finds the original plan would require peak funding of $72.6 billion rather than the previously reported $44.1 billion, would raise $13 to $14 billion less than previously expected and would be delivered three years later.
The original corporate plan prepared under Labor was “extremely optimistic and very unlikely to be achieved”.
NBN Co’s decision making had been characterised by “blind faith” in the achievability of the corporate plan “notwithstanding clear factual evidence to the contrary”.
There was a “relentless focus on the metric of ‘premises passed’ as the single most important of corporate success” to the exclusion of considering the number of premises that were actually connectable and the number connections made.
Only 357,000 buildings are likely to be passed by June 2014 rather than the 1.12 million in the corporate plan.
The cost of some connections would be 80 per cent more than originally forecast.
The review proposes using a mix of technologies in cities and suburbs, along the lines of the Coalition’s NBN policy, rather than solely fibre-to-the-premises as had been mandated under the previous government.
Apartment buildings would have fibre connected to their basements and existing copper for the rest of the connection and 3.4 million premises in areas serviceable by pay TV cables would receive speeds of at least 50 megabits per second delivered by cables rather than fibre.
Australians in areas with short copper connections would receive fibre to the node, delivering high speed without the need to connect new cables to each house.
In the areas of Australia presently served by fixed lines 26 per cent would receive direct fibre connections, instead of the 100 per cent originally planned, 44 per cent would be serviced by fibre to the node and fibre to the basement, 30 per cent would be serviced by pay television coaxial cables.
The mix would deliver 91 per cent of customers a speed of at least 50 megabits per second by 2019 rather than 57 per cent as was originally likely.
It would require capital expenditure of $30 billion and peak funding of $41 billion rather than the $43 billion and $73 billion that were now likely.
Operating revenue would accumulate to $18 billion by 2021 rather than $10 billion if the mix remains unchanged.
“The forecasts are conservative,” NBN Co chairman Ziggy Switkowski said. “We have modelled a 20 per cent capital expenditure contingency for our other scenarios rather than the 10 per cent in the original corporate plan.”
Dr Switkowski said the approach of the review had been to mandate a level of service delivery rather than a technology.
In some areas that were to be serviced by satellite the review recommends instead direct fibre to the promises connections because it would be cheaper.
Mr Turnbull said he had asked NBN Co to tell him the truth rather than what it thought he would want to hear.
Opposition communications spokesman Jason Clare responded in Parliament, accusing the government of breaking “one of the most important promises it made before the election”.
“This government has only been in office for three months and they’ve already broken promises left, right and centre … on debt … on education … on boats … and now today on the NBN,” he said.
“This betrayal, this broken promise will hang like an albatross around this Minister’s neck.”
