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Aus broadband faces budget blow-out

The Australian Government’s high-profile National Broadband Network (NBN) slated to deliver “fibre-to-every-home” is facing cost over-runs, amid mounting concerns about delivering this major project to time and budget.

09/08/2012

Revised figures indicate the government may need to inject an extra US$2.9 billion (AUD$2.9 billion) to off-set capital and operating costs.

Original spending for this broadband roll-out was placed at US$36 billion (AUD$36 billion), while delivering high-bandwidth services to homes and businesses.

The NBN will connect just 92,000 homes and offices to broadband services by June 2013, well below earlier projected forecasts.

The June 2013 subscriber rate represents a 14 per cent uptake, compared with an earlier forecast connecting 566,000 users nationally.

“Changes in the scope of the overall project required to be delivered by NBN Co have resulted in an increase in Capital Expenditure during the Construction period,” notes a revised four-year corporate plan released 8th August by the NBN Co.

Sydney-based NBN Co is managing the roll-out of Australia’s most ambitious telecommunications infrastructure project. This project is comparable in size and scope to building Sydney’s iconic Harbour Bridge.

“The company expects to achieve an annual Internal rate of return of 7.1 per cent, a marginal increase on its original projection released 20 months ago before the full-scale rollout of the National Broadband Network had commenced,” notes the NBN Co’s corporate plan.

Completion date for the NBN is being pushed back by six months to mid-2021.

Opposition’s shadow minister for communications and broadband, Malcolm Turnbull, has accused the Australian government of “hiding” the true original costs to build this national broadband network.

“The government’s strategy from the beginning has been to hide the true costs of the NBN and exempt it from parliamentary and public scrutiny,” warned Turnbull.

“This week’s revised corporate plan will not be credible unless it owns up to the true overall cost of the project, and acknowledges the rollout delays and higher costs that are obvious to the community.”

Despite the broader debate surrounding the NBN, this project is “on track” to meet its targets, according to the Federal minister for broadband and communications, Stephen Conroy.

Additionally, Australian finance minister, Penny Wong, has noted the NBN will deliver a “solid return” for tax-payers.

This project’s focus should not just be on profits, but the value it will bring to businesses and families, she says.

The NBN project is the poster-child of Australia's current Labor-led government. It was crafted, during an earlier election promise, to deliver affordable broadband to every home across cities, towns, and regional areas.

The Labor government, under Prime Minister Julia Gillard, faces an election in the New Year.

Industry observers note that Australia's widely-debated, and somewhat controversial, broadband project may be replaced by a more affordable blueprint, should the Opposition (Liberal Party) win government in 2013.

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