NBN: Noalitionomics - Numbers don't add up

The Coalition NBN Policy fails a simple Maths check: they cannot only invest $20.4 billion.
On their own figures, it's at least $25.25 billion.

This is on top of the "rent not buy" boondoggle that swaps $8.5 billion Telstra payments into rental, not CapEx, taking the whole project cost to $31.25 billion.

If you add unavoidable new householder costs of $450-$1,000/premise, the real Whole Project cost is $3-$6 billion more, $34.5-$37.5 billion.

Pushing costs from "the taxpayer" onto "taxpaying subscribers" isn't just cynical in the extreme, its deliberately "playing semantics".


Suddenly, saving at best 10%, probably nothing, on one they are planning to throw away, makes NO sense. What will the cost of a mass deployment upgrade of the Coalition's FTTN? Nothing: it's in the future! You can bet it will be the same under-handed, tricky & slippery deal where the taxpayer picks up the entire tab.

The $450 difference per premise in FTTP & FTTN construction won't be made up in ten years: operating costs are at $30-$60/year/premise higher for the FTTN and over 75% of the FTTP costs are made up of labour, fibre and premises/fixtures. You couldn't save this amount if they were giving the gear away in ten years. The entire scheme could never work as proposed.

OpEx and CapEx: Just because you pay for something after you purchase it, doesn't make it "free" - ask anyone with an old banger: cheap to buy, costs a bomb in fuel. Before buying a car, you want to know "what will I spend, all up, over the time I'll have it". Pushing the Telstra payments into OpEx is an Accounting fiddle to hide the real cost.

That there are other serious misstatements and flagrant omissions in the Coalition Plan. If they are transferring $8.5 billion into OpEx, and increasing network maintenance to $800MM/year and paying Telstra to maintain the lines, how can they save $4 billion/year as well?

Opex over 2012‐2021 is $22 billion, versus $26 billion in the current NBN Co plan. [Pg 31 of Background Doc.]

CapEx Breakdown

The Coalition have deliberately attempted to hide their Bad Maths by not providing a sectional breakdown. On their own figures, this is what it has to be ($25+ billion) and will certainly be much more when the real state of the copper is found with "line tests":

• Fixed Wireless and Satellite: $3B
• FTTN (8.968M): $8.1B (@$900/premise)
• FTTP (2.8M): $1.7B + $3.8B = $5.5B
• Telstra FTTP access payments = $2.64B (24% of $11B)
• NBN Co Internal Systems: $6B
• Unaccounted costs:
• FTTN planning
• Provisioning FTTN for FTTP upgrade: 20% extra
• FTTP Materials waste and loss
• Copper CAN reconfiguration
• Copper CAN remediation
• Copper CAN maintenance costs.
• If you cut Telstra's copper, do you now look after it?

The 2012 NBN Co Corporate Plan has total CapEx of $37.4B, of which $28.5B goes on the FTTP build, leaving ~$9B for "everything else", of which $3B is for Fixed Wireless and Satellite.

It seems the Coalition didn't go the Maths or decided NBN Co were spending $6 billion they could just ignore.

The 2013 report to the Parliamentary Committee corroborates the $6 billion as essential, critical CapEx.

There is a lot more to running a Telco than just running a cable up the street. The Coalition don't seem to have understood this.