Tue, 24 Aug 2021 - 16:12
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NBN goes from strength to strength

During this extraordinary pandemic period, it can sometimes feel like there is not much good news.

 

In fact, there are many examples of what has worked well in getting us through the pandemic, whether it is our world class health system, the reliable performance of our big supermarkets in getting food to Australians -- or the national broadband network. 

 

When millions of us moved almost overnight to working and studying from home in March last year, we really needed good broadband.  Traffic levels on the NBN jumped by 70 per cent during the day. But the network hardly missed a beat.

 

And with the most recent round of lockdowns, many Australians are again relying heavily on the NBN. Once again it is meeting our needs.

 

When the pandemic hit, some 98 per cent of premises in Australia were able to connect to the NBN. Today it is virtually one hundred per cent, around 12 million premises.

 

The number of homes and businesses connected continues to rise, today standing at 8.2 million.

 

But things could so easily have been different. When our Liberal National Government came to office in 2013, we inherited a failing project. Labor had spent six billion dollars on the NBN, but barely over 50,000 premises were connected to the fixed line network.

 

If we had stuck with Labor’s plan, which envisaged a much slower rollout, some five million fewer homes and businesses would have been connected to the NBN in early 2020.

 

Those homes would have been stuck on the earlier generation of broadband, which has lower download speeds and much lower upload speeds.  It just would not have worked for videoconferencing, which needs good speeds in both directions.

 

The NBN’s good operational performance is matched by increasingly good financial performance. This was illustrated last week in the financial results for 2020-21.

 

For the first time, NBN Co is EBITDA positive, a huge milestone for any capital intensive network business.  EBITDA (earnings before interest, tax, depreciation and amortisation) was $1.35 billion in 2020-21, an improvement on the previous year of more than $2 billion.

 

The company has now successfully raised over eight billion dollars in the private debt markets, allowing $6.3 billion of its loan from the Commonwealth government to be repaid.  This is strong evidence that the private sector debt markets see that NBN has a viable business model. 

 

When Labor hurriedly announced its cobbled together NBN plan in 2009, after an earlier plan had ignominiously collapsed, it promised that the NBN would become a profitable business.  

 

But Labor had no idea how to achieve that objective.  By contrast, our Liberal National government appointed a capable and experienced board and management team once we assumed responsibility for the project in 2013.

 

In turn, the new team at NBN set out a clear plan to deliver broadband across Australia using a ‘multi-technology mix.’  This let us get the rollout finished much more quickly.  But we also said that in due course the network would be further upgraded.

 

Through a disciplined and diligent roll out process, we have stuck to the plan and delivered today’s impressive numbers.

 

Last year, we made good on our 2013 commitment for future network upgrades, announcing that NBN would invest $4.5 billion so that by 2023 three quarters of all fixed line premises will be able to order a speed of up to one gigabit per second: blazing fast broadband.

 

Kevin Rudd responded by saying we had belatedly adopted his plan.  This was dead wrong. He completely missed the critical way in which our plan is different.   

 

Under our plan, in the areas to be upgraded from fibre to the node, NBN will roll the fibre optic cable down the street; but we will only install the fibre optic connection to the customer’s home once an order is placed for a high speed service.  

 

This is a businesslike and capital efficient approach; Labor’s approach by contrast wasted both capital and time.  Why would you spend $1500 per home to connect every home with fibre optic all the way when some of those homes will never order a speed high enough to require fibre?

 

Making high-speed broadband available in every corner of a sparsely populated continent the size of ours is a significant national achievement.

 

Labor talked a big game, but could not deliver.  As usual, it took the Coalition to fix up their mess and get the job done.

 

As we deal with the pandemic, it is human nature that we focus on our challenges.  But in fact there have been plenty of things that have worked well and been there when we really needed them.

 

The NBN is one.