NBN Implementation Study undermines government plans to levy new development for backhaul

07 May 2010

The National Broadband Network Implementation Study, released yesterday, seriously undermines government plans to require new urban development projects to help cover the costs of the broadband network, according to the Urban Taskforce.

The report was prepared by McKinsey & Company and KPMG and has been described by the government as a “landmark study”.


The Taskforce’s chief executive, Aaron Gadiel, said the report makes it clear that NBN Co should act as a network provider of “last resort” in development areas and should bear all costs of the roll-out, other than trenches, ducts, pits and pipes on a developer’s site.


“This is exactly what we’ve been saying since the Federal Government announced the NBN network 12 months ago,” Mr Gadiel said.


“There’s been a year-long debate about whether or not development projects should be forced to carry the cost of fibre and network infrastructure.


“Under the original proposal existing residents and existing businesses will benefit from a taxpayer funded rollout of a national broadband network while occupants of new business premises and new home buyers had to pay twice.


“They paid once through their general taxes and again through embedded costs in the price of their newly developed properties.


“The NBN Implementation Study offers absolutely no support to the government’s proposal for developers to cover the costs of ‘backhaul’.


The study proposes that developers should only be liable for trenches, ducts, pits and pipes when NBN Co has deployed its network in an area.


Recommendation 13 states that “NBN Co [should] cover the costs of installing all other FTTP network infrastructure up to the premises”.


In areas where the NBN network has not been deployed, the Implementation Study makes it clear that a development proposal may only require fibre-ready duct, pit and pipe to facilitate a later re-fit.


The study echoes concerns consistently advanced by the Urban Taskforce when it says that “Greenfield estates which are not adjacent to an existing network can be expensive to serve. A new fibre exchange may be required, and connecting the exchange to a competitively provided backhaul network may require a long and expensive link to reach existing backhaul links”.


“We’re pleased that the Implementation Study has taken a commonsense approach to this issue,” Mr Gadiel said.


“We trust the government will take note of these findings and modify the proposal it released last month.”


Last month’s proposal would have required up to $3,000 in network costs to be embedded in the cost of each new home and newly developed business premises would be exposed to uncapped requirements to contribute to network infrastructure.


“Developers have always been willing to play their part in supporting high-speed internet access for Australia. “But this role has to be limited to trenches, ducts, pits and pipes on a development site anything more will impact on the supply of new homes and business premises.”


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.


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