Chapter 2 Performance Reporting
The Shareholder Ministers’ second National Broadband Network (NBN)
rollout Performance Report (the Performance Report) was provided to the
committee on 10 April 2012. The Performance Report covers the six
month period ended on 31 December 2011 and is based on information
provided by the NBN Co to the Government as part of its regular obligatory
The Performance Report, similarly to the previous Performance Report
n A summary of the key
milestones achieved by the NBN Co.
n Year to date
financial reports for the period ended 31 December 2011.
n ‘Measurement against’
NBN Co’s Key Performance Indicators (KPIs).
This chapter outlines the performance related information associated with
the physical NBN rollout and NBN Co’s public engagement on the NBN rollout. An
update on regulatory and pricing matters associated with the NBN rollout
including the e-readiness of small business is discussed in Chapter 3 of
this report. Remaining issues raised in the Government’s Performance Report
such as the NBN rollout in regional and remote areas and contracting are
discussed further in the remaining chapters of this report.
Key Features of the Performance Report
Format and Content
The Government’s Second NBN rollout Performance Report contains similar
information to the Government’s First performance report with the exclusion of
the half yearly corporate plan target.
Unaudited financial statements have again been included in the Performance
Report. No explanation as to the unaudited status of the financial reporting
has been provided.
In the cover letter to the Performance Report the Shareholder Ministers
have stated that ‘some information’ on the NBN rollout performance has not been
included in the second performance report as the rollout is in its early
stages. The Shareholder Ministers advised that the information contained in the
... will become more detailed as the rollout progresses, as
more premises are connected and as NBN Co’s operating and business systems come
online during this year.
The Performance Report reiterates this point with the Shareholder
This is the second government report to the Joint Committee
on the National Broadband Network and as such reflects initial early reporting
while systems and reporting processes are still under development. The data
will become more meaningful against actual and forecast measures as the
reporting series builds up over time. This report is consistent with a start up
company in the early years of a network rollout.
Following a previous request to receive statistical NBN rollout
information in tabular form with reporting against specific KPIs,
the shareholder Minsters responded in the Performance Report with:
..the Government is supportive of providing the joint
committee with quality information to inform its review of the NBN rollout...
however, information on the cost per premises passed or activated and take up
rates broken down into levels of service is not meaningful at this point in
time based on NBN Co’s business and operating systems still being developed,
the delays arising from completion of the Definitive Agreements and the
finalisation of the fibre contracts. 
Later in regard to the same request, the Department of Broadband,
Communications and the Digital Economy (DBCDE) responded by stating:
Once NBN Co’s 2012-2015 Corporate Plan is finalised, the
Government will consult NBN Co in regard to this request and follow up with the
Joint Committee in the context of future Shareholder Ministers’ reports.
Key Performance Indicators
National Broadband Network Rollout Targets
On 16 April 2012, the NBN Co informed the committee that it would be
revising the NBN rollout targets contained in the NBN Co 2011-2013 Corporate Plan.
Targets would be revised and published through the release of a new corporate
plan to the Government by the end of May 2012.
The assumptions on which the NBN rollout targets (as contained in the
NBN Co 2011-2013 Corporate Plan) were dependent are:
n ‘The availability of
exchange facilities for the location of the semi-distributed [points of
n Negotiations yet to
finalise on commercially attractive terms the procurement of Greenfields
Build-Operate-Transfer (BOT); and
n Securing contracts
with suppliers and construction contractors on competitive terms and
The NBN Co explained that ‘a number of assumptions... made’ in the NBN
Co 2011-2013 Corporate Plan had ‘changed for reasons which... [it] simply could
The NBN Co further stated that the new corporate plan would incorporate
the recent changes to the NBN rollout policy and regulatory environment. These
changes included factoring into the revised NBN rollout targets: the time taken
to complete the Telstra Agreement, the Australian Competition and Consumer
Commission (ACCC) advice to change the number of POIs from 14 to 121, and the
Government’s change in Greenfields policy.
More importantly, the NBN Co commented that as a result of the change in
assumptions underpinning the current corporate plan, that current NBN rollout
targets were no longer relevant in measuring either the progress of the NBN
rollout or the performance of the NBN Co. Further, the NBN Co stated that if
the assumptions underpinning the revised NBN rollout targets were to change
again, that the corporate plan would have to again be revised. The NBN Co
We are now in the process of developing a new corporate plan
based on current assumptions and we will provide this to government at the end
of May. So it is neither reasonable nor valid to compare NBN Co's performance
with the deployment forecasts that were included in the December 2010 corporate
plan. However, it is perfectly legitimate to measure NBN Co's performance
against the announcements we have made in our 12-month and three-year rollout
schedules. We are ready to be measured and held accountable for our performance
versus what we have committed to in those rollout schedules, but I would also
like to be clear that, if there are any future policy changes, the assumptions
in the corporate plan we are about to submit may have to change.
In the context of the unpredictable impact of the change to the
Greenfields policy, the DBCDE stated there are no future plans to significantly
alter the Government’s Statement of Expectations. Mr Peter Harris, Secretary to
the DBCDE stated:
I am not aware of any significant changes planned for the
statement of expectations. As Mr Quigley said when he was referring
particularly to greenfields, the financial heads of agreement and the
greenfields arrangements with Telstra, in the middle of 2010 through to the
middle of 2011, varied a number of times. That made it quite difficult for any
of the parties including Telstra as much as NBN Co to forecast what the impact
on themselves would be. That was driven substantially by the fact that none of
the parties had a very good handle on this. There was a lot of claim being made
about a residual bow wave—or how many applications had already been lodged over
many years prior to this for greenfields. Those numbers varied significantly.
Then there were signals from developers that they also had a huge number of
applications ready to go and subsequently lodge. As Mr Quigley said, it did not
quite pan out in the way we had expected.
The DBCDE also stated it is unlikely that there will be further change
to the Greenfields policy, nor any significant change to current policy. This
is with the exception of addressing ‘operational issues’ affecting the NBN
rollout. The DBCDE cited the example of the battery back-up issue as posing a
possible change in existing policy. The DBCDE stated:
I am not aware therefore the greenfields policy is going to
change any further. Any of us who have been involved in that would chuck
ourselves off the top of a tall building rather than change greenfields policy
again. I therefore do not anticipate any changes of that magnitude nor any
other significant changes to what is in place. That said, there will
potentially be, in the course of the rollout, things which you might call
'operational issues' still to be addressed. I guess the committee is aware of
battery backup as an example. Those are the sorts of things that could change
but I would not call that—I am trying to answer your question here in a
holistic way—quite a statement of expectations type shift, even though if
potentially something does shift in battery backup it may well have a
significant financial saving option available to it.
In contrast Telstra Corporation (Telstra) did not ‘believe that any impact
on NBN rollout had much to do with the regulatory process’ and stated:
The explanatory memorandum [to the Binding Definitive
Agreement between Telstra and the NBN Co] makes clear that there were interim
arrangements in place with the NBN. We believe that any
impact on NBN rollout did not have much to do with this regulatory process. ...the
regulatory process was very long and very complex—harder work than all of us
anticipated. The ACCC did a very thorough job...double checking and triple
checking the undertaking. They talked to a lot of people around our structural
separation undertaking in particular the interim equivalence in transparency
arrangements. That did take a very long time but we got there in the end. We
have an outcome that, I believe, will hopefully start to reduce a lot of the
concern and angst in the industry in the interim period around the equivalence
to copper. And we got the undertaking which will allow the definitive
agreements to become unconditional. We are now spending a lot of time making
sure we get the contract going, deliver on the contract and comply with our
commitments under the structural separation undertaking.
Further, Telstra stated that it is not made aware of the status of the
progress of the NBN rollout ahead of public information being made available by
the NBN Co. Telstra stated:
One of the critical things we had to build into the
agreements between Telstra and the NBN—and you could understand why—was we have
no privileged information on where NBN is at in the rollout. So any information
that comes from NBN as to where it is in its roll-out schedule and what [it] is
going to do comes to us at exactly the same time that it comes to everyone. Our
knowledge of the NBN rollout is very much the same as and predicated on general
public information. We do not have a huge amount to add to—I am sure NBN will
explain this afternoon—where they are at in their rollout schedule.
Benchmarking National Broadband Network Rollout Progress
On 18 October 2011, the NBN Co made available on its website, a 12-month
NBN ‘construction schedule’ which included area rollout maps. The schedule
identified where construction work was already underway (on 63 500 premises)
and where work would begin from the date of schedule issue to September 2012
(across 28 new locations passing 485 000 premises to be connected to the fibre
As part of the rollout schedule announcement the NBN Co stated that ‘on average
it is expected to take 12 months from the start of the fibre network rollout in a given area until individuals are
able to receive high-speed broadband over the NBN.’ The rollout schedule would
be updated quarterly to ‘include additional locations.’
Complementary to and building on the information contained in the
12 month NBN rollout schedule, on 29 March 2012, the NBN Co released a
three-year NBN rollout plan. The three-year NBN rollout plan included ‘three
quarters of a million premises where construction work is underway or set to
begin’ in 2012, ‘including the eight early [release] locations where the fibre
network is already in service.’
As part of the three year rollout schedule, the NBN Co created a new KPI
of ‘Work Under Way’ (WuW) to indicate the status of construction projects that
had commenced. The KPI of WuW ‘represents premises currently undergoing site
design and/or existing construction activity.’
Regardless of the addition of the new KPI –WuW, the NBN Co assured the
committee that there would be no change to, or revision of, the NBN rollout
targets on the two main KPIs used in measuring NBN rollout performance- those
of ‘premises passed’ and ‘premises activated’. The NBN Co explained:
I now turn to the recent announcement we made on the
three-year rollout schedule. By mid-2015, the fibre rollout will be underway or
completed in one-third of the country; that is, in over 3.5 million homes and
businesses in more than 1500 communities, in every state and territory. There
has been some commentary that by referring to 'work under way' NBN Co has
changed the definitions used. I want to assure you that we have not done that.
We have not changed our definitions. The terms 'premises passed' and 'premises
activated' are what we used in our last corporate plan and we will be putting
them in the next corporate plan.
Further, the NBN Co stated that it would factor into its new corporate
plan the policy changes pertaining to the NBN rollout in addition to the
12-month and 3-year rollout announcement for the purpose of benchmarking future
NBN rollout progress. The NBN Co stated:
...we are working on that timetable now to take on board all
the things—at least three of the things I just mentioned there; there are some
others, of course. All of those will be incorporated into the next version of
the corporate plan, which we will be submitting to the government in the second
quarter. That, I think, will then form quite clearly the benchmark against
which we will be measured, including, of course, the 12-month and the
three-year announcement we have just gone out with.
National Broadband Network Rollout Progress
Progress over the Reporting Period
The Performance Report included information about the progress of the
NBN rollout over the period from 1 July to 31 December 2011, in addition to developments
associated with the NBN rollout from the period covering 1 January 2012
until 31 March 2012.
The key results for the NBN rollout for the specified period are shown
in Table 2.1 – Key Results of the National Broadband Network Rollout for the
six month period ended on 31 December 2011.
On 18 October 2011, the NBN Co released a twelve-month NBN rollout
schedule identifying 28 new locations covering 485 000 premises where
construction of the NBN would begin over the period. The 12-month schedule also
listed sites where the rollout is already underway for 63 500 premises
‘including second release sites, such as Geraldton in Western Australia, and
extensions to First Release Sites such as Townsville in Queensland.’
There are no half yearly targets contained in the NBN Co 2011-2013
Corporate Plan, instead targets are provided for the financial year periods
ended on 30 June for 2011, 2012 and 2013.
Table 2.1 Key
Results of the National Broadband Network Rollout for the six month period
ended on 31 December 2011
Cumulative as at
31 December 2011
Cumulative as at
30 June 2011
Work under way (WuW)
First Release Interim Satellite
First Release Interim Satellite
First Release Interim Satellite
Ministers’ Performance Report, Submission 12, p. 4.
By the end of the period, 14 256 premises were passed and 1438 premises
were receiving active service.
Progress on the Tasmania Stage One NBN rollout was:
n ‘A total of 3987
premises have been passed by the fibre network;
n 657 premises are
receiving active services;
n of the premises
passed, there are a further 1397 premises...connected’ [to the NBN] but are ‘not
yet receiving active services.’
There were 11 187 premises under construction in the Tasmania Stage Two
NBN rollout. In particular:
n civil construction
continued in Sorell, Deloraine, Kingston and George Town
n the passive network
was completed in Triabunna
n ‘planning and design
of the South Hobart network progressed.’
For Greenfields or ‘new developments’, by the end of the period 110
premises were receiving active services. Over the period NBN Co ‘received 2956
applications from developers, with 1988 active applications covering 109 988
Fixed Wireless Network
In relation to the Fixed Wireless Network, the following progress was
n Fixed Wireless trial
sites came into service in Armidale, with ‘fixed wireless data connections ... established
from Armidale to the National Test Facility.’
commenced in the Armidale, Tamworth and Toowoomba wireless service areas.
n Testing of [Long Term
Evolution] technology for fixed
wireless application was completed. The equipment was further ‘integrated into
the National Operations Centre in readiness for managed operations.’
In relation to the Satellite Network, the following progress was made:
n The Interim Satellite
Service (ISS) was launched.
n ISS trials were
completed and service availability ‘was ramped up’ in November.
n There were seven retail
service providers (RSPs) offering NBN services over the satellite network to
2197 active premises. ‘Additional satellite capacity was commissioned by using
the IPStar satellite.’
n Development and
release of the ‘final spacecraft requirements specification for the Long Term
Satellite [Service] (LTSS) project.’
n Responses to request
for tenders for the LTSS and the ground systems and customer equipment were
received and were ‘being evaluated.’
quantity surveying and preliminary town planning work commenced on a list of
potential radio frequency (RF) gateway sites across the country.’
coordination associated with the International Telecommunications Union orbital
slot confirmation process commenced and continued with both domestic and
n Spectrum was obtained
for use in the provision of the LTSS.
n Announcement of build
on two next generation Ka Band Satellites to be completed by 2015.
Key Milestones Achieved
Over the period, the Shareholder Ministers identified a number of key
milestones achieved in facilitating progress of the NBN rollout. Table 2.2
summarises these milestones.
Table 2.2 Key
Milestones Achieved Supporting the National Broadband Network Rollout for the
six month period ended on 31 December 2011
NBN Co signed two
separate agreements enabling NBN rollout in Western Australia (Syntheo) and
The first new housing development was switched on in
Met the ‘ready for commercial service’ milestone for
the first release sites on 30 September 2011
NBN Co launched its Interim Satellite Service
Initial NBN rollout plan agreed with Telstra
NBN Co released a twelve month NBN rollout schedule
Contract to build the first stage of the NBN in
South Australia and the Northern Territory awarded to Syntheo
‘Contracts to provide an array of equipment for
installation in homes and businesses, worth up to $635 million over the next
five years, were executed’
NBN Co launched: two demonstration facilities, the Discovery Centre
in Docklands, Melbourne and the NBN Co Demonstration Truck to travel across
‘The final executable version of the Wholesale
Broadband Agreement (WBA) was published. As at 31 December 2011, eleven’ RSPs
‘had signed the WBA’
NBN Co lodged its revised Special Access Undertaking
(SAU) with the ACCC
Telstra and NBN Co extended the end date of the
Implementation and Interpretation Deed (IID) to 30 March 2012
Delivery of the transit schedule in line with the
initial rollout plan with 26 Fibre Access Nodes (FAN) and aggregation node
sites handed over from Telstra
NBN Co had WuW across all
delivery platforms covering 92 032 premises
Ministers’ Performance Report, Submission 12, p. 3.
Current NBN Rollout Progress
In addition to containing information on the progress of the NBN rollout
for the requested six month period, the performance report includes an overview
of the ‘post-closing events’ since finalisation of the report. Post closing
events include the key announcements made and events which took place until
31 March 2012.
The shareholder Ministers identified the items in Table 2.3 as key
announcements and events contributing to the progress of the NBN rollout. These
developments cover the period from 1 January to 31 March 2012.
Table 2.3 Key
Events and Announcements made Supporting the National Broadband Network Rollout
for the six month period ended on 31 December 2011
NBN Co announced that Space Systems/Loral will build
two next generation Ka‐band satellites
NBN Co released a quarterly update to its 12‐month rollout schedule
ACCC accepted Telstra’s Structural Separation
Undertaking (SSU) and draft Migration Plan
The Definitive Agreements between NBN Co and Telstra
Corporation Limited (Telstra) became unconditional
A total of 7282 customers are connected to broadband
services over the NBN
NBN Co announced that Visionstream Australia Pty Ltd
will undertake construction of the remainder of the fibre network in Tasmania
NBN Co released its indicative three year rollout
plan which will see NBN construction either begin or be completed by mid 2015
for more than 3.5 million homes, businesses, schools and hospitals across
39 RSPs have signed the WBA
Ministers’ Performance Report, Submission 12, p. 4.
NBN Co Limited Financial Result
The financial result and associated financial performance information
presented in the Government’s performance report covers the six month period
from 1 July to 31 December 2011. The accompanying income and cash flow
statements, balance sheet and schedule of commitments are presented as
For the first time since its establishment, on 4 October 2011, the NBN
Co commenced ‘billing for commercial services’.
As a result the NBN Co received a ‘telecommunications revenue’ of $356 000 and
with an interest income gave the NBN Co a total half yearly revenue of
approximately $30 million.
With total expenses exceeding total revenue over the six month period
ended 31 December 2011 the NBN Co experienced a
consolidated operating loss of approximately $221 million.
Due to the financial loss experienced over the period, the NBN Co has
recorded a ‘nil tax expense’ for the period with ‘no deferred tax asset...
recognised for these tax losses at this stage.’
In addition, the Performance Report states that the NBN Co ‘expects to be in a
tax loss situation for the current and next several financial years.’
The consolidated half yearly financial loss is ‘mainly’ attributed to:
n ‘$101 million of
expenses’... ‘driven by the headcount increase of 822 employees’
($50 million for the corresponding period).
n ‘$40 million for IT
and facilities expenses... ($12 million for the corresponding period)’.
n ‘$29 million for
external services costs... ($31 million for the corresponding period).’
Capital expenses over the period were $346 million and included
n $98 million for the
rollout of the NBN across the three technologies of fibre, wireless and
n $124 million on
‘systems and processes, including Data centres, National Support and Operations
Centre, Business Support Systems and Operational Support Systems
n $41 million on new
developments and Customer Connection expenditure.
Operating expenditure over the period was approximately $222 million.
The operating expenditure target stated in the NBN Co 2011-2013 Corporate Plan
for the financial year ending on 30 June 2012 is $528 million. The current
operating expenditure result represents approximately 42 per cent of the target
An equity injection of $1 120 000 million assisted to produce a cash
flow of $1 143 643 million at the end of the financial period, a $605 million
increase from that in June 2011.
For the half yearly period, commitments payable have increased by
approximately $434 million.
Estimated financial targets derived from the NBN Co’s 2011-2013
Corporate Plan for the half yearly 2011-2012 result have not been included as
these were not made available in the current Performance Report.
In its report to the committee, the Shareholder Ministers have again
stated its ‘report is consistent with a start-up company in the early years of
a network rollout.’
Mr Mike Quigley, Chief Executive Officer of NBN Co, similarly stated
that the financial results of the NBN Co have met current expectations and
reflect that the company is in ‘start-up mode’.
Mr Quigley also stated:
Given where we are that is about what we expect it to be.
That is what you would expect at this point in time. Clearly, it is a function
of the rate at which you get customers passed and customers activated.
The committee’s Second Report made a number of findings in relation to
engagement and consultation with communities about the NBN rollout. In
particular, the committee highlighted a need for effective consultation and
engagement with rural and regional areas.
In this respect, the committee recommended the NBN Co ‘finalise and
publicise its plans for community consultation with regional remote Australia’
and requested the performance report include information on:
n Details of the progress
of its consultation plans;
n Issues raised; and
n Numbers of
The Government broadly supported this recommendation and has included the
requested information in both its formal response to the Second Report as well
as its second six-monthly NBN rollout performance report.
In response to the committee’s findings and recommendation, the
Shareholder Ministers stated:
NBN Co has a dedicated team to engage with communities and
stakeholders throughout the rollout process and is building relationships with
local authorities and utilities to ensure it takes full account of their
requirements and develops community understanding of the company’s project plan
as the project progresses.
Addressing the Information Gap
To assist the community with the ‘when’, ‘what’ and ‘how’ questions
related to the rollout, the NBN Co launched two demonstration facilities on 25
November 2011: the Discovery Centre in Melbourne and the Demonstration Truck to
travel across Australia.
As at 31 December 2011, the Demonstration Truck visited ten locations in
Tasmania. From November 2011 to
April 2012, the Truck visited 49 communities across Tasmania and Victoria and
hosted more than 5200 visitors.
The NBN Co has also held town hall sessions with an average of 200
residents attending those forums. A national Customer Contact Centre will be
based in Queensland staffed by over 100 employees. 
The Centre is expected to be operational in 2012.
The NBN Co will launch three key ‘public outreach campaigns’ in 2012: These
n Public Education
Activity (PEA) (which will facilitate continuity of telecommunications services
when the copper network is retired).
n A sectoral benefits
campaign (starting with the Education sector).
n An NBN interest and
understanding generating campaign.
In regard to the PEA campaign, the Performance Report stated that the
NBN Co ‘is working with government and industry in an appropriate
governance and consultation structure’.
In regard to its overall public engagement and education activities and
campaigns the NBN Co stated:
Over the next three years we are going to be appearing in
around one-third of Australia's communities, so is important that we set about
informing, and engaging, individuals and communities about what it is we are
doing, and explaining what it is the NBN will do for them.
To those ends, all of our efforts in our communications, our
community engagement and our stakeholder engagement reach three objectives: the
first one being to inform, the second one being to prepare, and the third one
being to assist in migration.
The first objective is to inform. Over the next three years,
trucks, workmen and giant rolls of fibre will begin to appear in around
one-third of Australia's cities, towns and suburbs. It is important that we
ensure that people are aware, as we will be active in their communities and on
their premises and on their properties, of what it is we are, what we are doing
and what it will mean for them.
On 29 March 2012, as part of its ‘community informing’ agenda, the NBN Co
released a three year rollout schedule which names those areas where work will
commence and has already commenced over a three year period. The NBN Co also
commenced its first advertising campaign for the three year rollout schedule. Communities
included in the schedule were targeted through television, online, radio and
The NBN Co explained the purpose of the release of its three year NBN
rollout schedule and stated:
The information that we provided in the three-year rollout
plan serves a different purpose from that in the corporate plan. It provides
communities and our retail telco customers with information on where work will
be starting. In fact, this committee in its second report urged NBN Co to
provide more information to communities and noted that the three-year rollout
plan would assist in this. We absolutely agree. We want to give people the
information that is most relevant to them. People want to know when they will
see NBN workers in their streets, so our rollout schedule tells them when work
will start in their area. From that, they will also have a very good idea about
when work will finish in their area, which is on average 12 months from when
Of the ‘customer migration’ component of its public engagement and
education activities, the NBN Co stated that customer migration from the copper
network to the NBN would occur through customers becoming informed about the
NBN and then signing up for services provided by RSPs. The NBN Co explained:
Our business plan stipulates that over the next decade we
will migrate every Australian premise from the old copper infrastructure over
to the NBN. That is 12 million homes and businesses—the important point being
that for every one of those household owners, for every one of those business
people, they need to take an action. They need to take a step. They need to
call up their local retail service provider and order a service. To do that
they need to understand, they need to be motivated and they need to have the
information about what the NBN is, when it will be available for them and what
the benefits are that they can hope to achieve from it.
Public Engagement Activities
A core objective of the NBN Co’s communication strategy is to prepare
communities for the NBN. The NBN Co’ s Chief
Communications Officer stated:
On the second objective, to prepare: it is essential that we
ensure communities and institutions are fully prepared to capitalise on the
benefits of the NBN. A great example of this is in the Illawarra, where the
University of Wollongong and the Kiama Municipal Council have had the foresight
and the planning to really embrace the NBN and to build the opportunities of
the NBN into their core processes and their core means of servicing their communities
and servicing their students. Changes like this take time.
They take time to bed-in, especially, and planning for complex and large
institutions or organisations is often several years long. It is important that
we ensure bodies such as schools, universities, hospitals, councils and
businesses across Australia are informed and engaged early so that they can
build the opportunities of the NBN into their own strategies and into their own
The NBN Co conducted a series of information sessions in first release
sites that focussed on the sectoral benefits of the network, including events
n Kiama for health
n Brunswick for small
business and innovation
n Townsville for tele-health
n Willunga for
Video case studies were also placed on the NBN Co’s website and online
channels with testimonials from businesses, education providers, health
services and individual home-users.
The Shareholder Ministers’ Performance Report also stated that
preparations were underway for greater public outreach campaigns on the
sectoral benefits arising from the NBN rollout, commencing with the education
sector. The Performance Report also stated that a campaign would be launched in
2012 to ‘generate interest in, and build understanding of, the NBN’.
A challenge for the NBN Co and all levels of government will be to
engage communities that are hesitant to begin developing their systems. In this
respect, the Berrigan Shire Council commented that at present as it had not yet
been given an expected NBN rollout start date for the area and was not
‘excited’ about the NBN rollout. The Berrigan Shire Council stated:
The dates seem to be a little bit far away for us to get
excited. Even for me in my role at council and looking after our own council's
internet connection, it is too distant and too vague for us to start to think
about what we can do. As soon as we get a fibre rollout date we might look a
bit more closely at it. But we are still waiting.
The Australian Retailers Association (ARA) commented on the need for
coordination and joint-initiatives for public engagement activities that will
prepare consumers, businesses and governments alike to become e-ready. The ARA
I think it is a job for both of us. It is something we have
been in discussion about with a list of ministers. ... We know that growth in
the online sector has had a significant impact on retailers in regional areas.
We know that many of those regional communities and retailers within those
communities want to access the global market through things like the NBN but
they are lacking knowledge about how to do that. Many of them literally do not
know how to set up a webpage. It is important to engage with all levels of
government with this.
The Australian Communications Consumer Action Network (ACCAN) welcomed
the NBN Co’s engagement with consumer and peak industry groups in the
development of public education activities. The ACCAN stated:
...we are very pleased that there is a proposal now for a
quarterly high-level consumer round table. That issue came up when we gave
evidence to the joint committee in 2011. This request has been acted on by the
NBN Co and the wheels are now in motion to have our first meeting in June
. We welcome this opportunity because we believe it will contribute to
making NBN Co’s public information activities more effective and also that
it will give the opportunity for the community to have direct input into the
Further, the ACCAN was of the view that ‘it is critical for the NBN Co’s
information activities to be conducted properly with suitable strategies for
specific community sectors.’ The ACCAN also stated:
An effective example has been the community information
campaign for the Digital TV switch-over. Accordingly, the purpose of the
Consumer Reference Group will be to bring relevant issues and questions that
arise in the community to NBN Co’s attention, and also to ensure NBN Co’s
public education activities are done in the best possible way. Having input
from a cross-section of peak bodies on a regular basis we hope will help to
make sure the information on the NBN rollout, and transition from copper to the
NBN, reaches all parts of the Australian community that it needs to reach.
As part of earlier efforts to improve community engagement and education
about the NBN rollout and changes to telecommunications services, the ACCAN
advocated that a number of peak bodies be included in a round table meeting of
the ‘Consumer Reference Group’. The NBN Co arranged for this meeting to be held
in June 2012.
Ongoing Community and Industry Concern
The NBN Co gave evidence of its work in engaging communities in the NBN
Rollout. The NBN Co stated:
The work that we do on the ground with communities is just as
crucial—working with councils, local businesses, schools and chambers of
commerce to ensure that as we start the rollout in their area they are not only
informed but also involved. We use several means to do this. We have built
demonstration facilities, including our discovery centre in Melbourne, to give people
a tangible sense of the equipment in the in-home and the in-business experience
of the NBN.
While the NBN Co and Shareholder Ministers have outlined the programs
and initiatives being implemented as part of the NBN education campaigns, the
committee received evidence of the current level of NBN information in rural
and regional communities.
The Regional Development Australia Northern Inland NSW (RDANI)
highlighted there is a limited understanding of the NBN in regional areas and a
coordinated approach to connecting to the NBN is needed. The RDANI NSW
People just do not know which way to go. Once they actually
find out the information, they really take to it. When we went from dial-up to
ADSL we had a similar problem. The take-up rate for ADSL was very low, but all
of a sudden it took off when people realised what was happening. With NBN, we
need to apply a much more coordinated approach where we get state and local
governments, businesses and chambers of commerce to work on this.
In reference to a recent survey conducted by the Australian Farmers’
Federation in relation to the NBN satellite service offered to rural areas the
ACCAN commented there needs to be better dissemination of NBN information to
such areas. The ACCAN stated:
The New South Farmers Association did a survey, and I gather
from that that there are a lot of farmers among whom there is a pent up demand
to get off inferior satellite service offerings that they are using now, but
they are not necessarily aware that the NBN's interim satellite offerings are
out there. So I think there is some need for better dissemination of the
information that this interim service offering is out there now. Perhaps it is
a case of ISPs not really promoting it because people are on contracts and it
is not really in their interest. We are not sure what the reason is, but there
needs to be better dissemination of information to the rural constituency.
Concerns were also raised by fixed-wireless and satellite communities that
they will receive an inferior service in comparison to those in the
fibre-footprint. In some cases, this was regarded as a ‘backwards’ step.
This evidence is further discussed in Chapter 5, in addition to the NBN Co’s
policy for extending the fibre footprint and the point at which communities are
drawn into the extension design process.
Vodafone Hutchison Australia (Vodafone) stated that over the ‘migration
period’ a clear and comprehensive communication plan which includes the
competition considerations is warranted. Vodafone stated:
It is vital that there is a clear and comprehensive plan,
which NBN Co leads and develops, that involves the community and the telco
industry in providing the right information to consumers—that is, things like:
what to expect when a connection occurs; when the migrations will occur; and
giving practical advice about how it will take place. We need to let people
know, 'Generally there will not be a change of experience; it is just a
different way of delivering the same services you receive, plus a whole lot of
great new opportunities.'
Vodafone also stated that NBN Co’s communication plan needs to inform
consumers that the NBN presents a wide range of new choices. Vodafone stated:
There is a practical element of reassuring people in that communication
plan, but there also needs to be a pro-competition part of it. It should not
just be about saying to consumers, 'Don't worry, everything will be the same.'
That would be a missed opportunity. It also needs to be saying to consumers:
'The NBN presents a wide range of new choices for you. There are new entrants
in the market that you should consider, because they might offer a solution
that better meets your needs.' So there is a practical set of communications
about reassuring people and giving them the right information, but there also
needs to be a pro-competition set of messages.
Delay of Answers to Questions on Notice
Both the committee’s First and Second reports contain substantial
comment on the significant delay experienced in receiving answers to questions
on notice from the NBN Co and the DBCDE, and the subsequent delay this caused
consideration of significant matters associated with reviews.
In its First Report, the committee ‘strongly urged’ the NBN Co and the
DBCDE to give greater priority to answering questions on notice with the aim of
assisting ‘the committee to undertake its role as intended by the Parliament.’
In its Second Report, the committee further commented on the delay
experienced in receiving answers to questions on notice from the NBN Co and the
In addition, the committee commented on the quality and quantity of
information contained in the answers to questions on notice that were received.
The committee stated:
For a number of answers, it seemed that only material that
was already available publicly, or evidence already taken at public hearings,
The committee subsequently recommended:
That the Department of Broadband, Communications and the
Digital Economy review its existing clearance processes for providing answers
to questions on notice with the aim of providing answers to questions taken on
notice where possible on the notified due date or within a reasonable timeframe
In response to the committee’s recommendation, the Shareholder Ministers
The Government supports this recommendation. The department
does prioritise its clearance processes for responding to Joint Committee on
the National Broadband Network questions on notice. However, depending on the
complexity of the question, on some occasions additional time will be required
for detailed analysis and or wider consultation prior to finalising a response.
Timeframe for Receipt of Performance Report
In its First Report the committee was unable to include information on NBN
rollout statistics because it did not receive the relevant quantitative or
qualitative information from the NBN Co and Government in time.
As a result, the committee (which was required by the Parliament to
report by the end of August 2011), reported without this information, on the
evidence and information it had received and collected from the wider community
as part of its First Review.
For the main purpose of informing committee reviews, and in an effort to
receive regular reports on the NBN rollout, in its First Report the committee
That the NBN Co together with the Department of Broadband,
Communications and the Digital Economy, commencing for the first quarter
2011-2012, provide a six-monthly report on the progress of the rollout of the
National Broadband Network, using established Key Performance Indicators and
performance measures, no later than three months before the committee is due to
report to the Parliament.
In its response to the committee’s recommendation, the Shareholder
n The government
supports this recommendation and submitted its first report to the committee on
23 September 2011.
n The government will
submit six-monthly reports to the Committee and adopt this reporting pattern on
an ongoing basis. The reports will provide quantitative and qualitative advice outlining
NBN Co's key performance information across the following areas:
on the rollout
n take up
financial information (profit and loss statement, balance sheet, cash flow statement,
and cash flow reconciliation)
of service including service levels and faults
and consumer consultation including complaint handling
associated with health, safety and environment.
n The information
provided to the Committee will become more meaningful as the rollout progresses
and more premises are connected and as NBN Co's operating and business systems
come online during 2012.
Taking into consideration the recommendation and the Government’s
support of it, the second Government Six-Monthly NBN rollout Performance Report
was due to the committee by 31 March 2012.
The Government’s second performance report was subsequently sent to the
committee on 9 April 2012 and formally received on 10 April 2012. The
committee’s only hearing on the NBN rollout performance was scheduled and held
a week later on 16 April 2012.
Revised NBN Rollout Targets and NBN Co Corporate Plan
The way information has been presented in the Government’s second
performance report, for the purpose of this review, does not allow it to be
compared with the results in the Government’s first performance report. This is
despite the Shareholder Ministers’ continuing statements that information
contained in performance reports will become more meaningful as the rollout
The NBN Co has stated that as a result of the significant changes to the
assumptions underlying the targets contained in its corporate plan, it will be
releasing a new corporate plan. As a result, the NBN Co stated that ‘it is
neither reasonable nor valid to compare NBN Co’s performance with the
deployment forecasts’ included in the current 2011-2013 corporate plan.
Instead, the NBN Co stated that it is ‘perfectly legitimate’ to measure
its performance against announcements made in its 12-month and three year NBN
The NBN Co also stated that ‘if there are any future policy changes, the
assumptions in the’ new corporate plan would have to change. This would mean
that the targets are rendered unreliable for any future corporate plan as soon
as there is any change to the NBN rollout environment.
In addition, as the 12-month and three year schedules published on the
NBN Co website are subject to change according to the pace of design,
construction and completion of the NBN, the associated targets will undoubtedly
be in a state of constant flux. This means that the NBN rollout cannot possibly
be measured in terms of progress against specific targets over an acceptable
timeframe which can then be compared between periods or years.
The committee is aware that the NBN Co is still in the early stages of
the NBN rollout and that as a result of delays with the Telstra Agreement,
change to the number of PoIs and changes to the Greenfields policy, that undoubtedly
there has been disruption and delay to the NBN rollout.
As a result of the NBN Co’s statements, that it cannot be held accountable
for its own corporate plan targets, and that revised targets will be subject to
change without warning, this will mean there is no way of gauging the progress
of the NBN rollout in relation to costs expended on the public infrastructure
The committee does not find it meaningful to be provided with data on
how many premises have been passed or premises made active between periods or
years without any kind of target or benchmark on which to compare this data.
The committee also understands that there is now a new KPI of ‘work
under way’ used to describe a new NBN rollout statistic, but does not
understand how this KPI adds any real meaning to the status of the progress of
the NBN rollout.
The committee finds this approach by the NBN Co disappointing and
contrary to the principles of transparency and accountability required of
public agencies, especially one responsible for the largest public
infrastructure project ever funded by an Australian Government.
The committee disagrees that current KPIs such as ‘cost per premises
passed or activated and take up rates broken down into levels of service is not
meaningful at this point in time.’
The committee requests the Government provide KPI information in the
performance report against targets in the Business Plan for the performance
report on homes passed, homes connected, and services in operation.
NBN Co Financial Result
The committee notes the NBN Co’s 2011-2012 half yearly financial result
as presented in the Performance Report reflects that the company is in start-up
mode, and while the NBN Co has commenced collecting a small amount of revenue
for services, has again experienced a consolidated loss.
The committee notes that the Government and the NBN Co have commenced or
delivered several activities under core communication goals.
The importance of demonstrating equipment as a method of informing the public
was discussed. However, the demonstration of equipment does not itself lead to
genuine engagement with community, nor does it demonstrate community
involvement in the NBN rollout.
The NBN Rollout Schedule website contains information on rollout
timeframes only available to those residents in areas identified to commence
work in the next three years. For residents living outside those communities,
no information is currently available. Preliminary engagement with outstanding communities
on anticipated timeframes for the NBN rollout announcements needs to be
factored into the public education activity.
As discussed in Chapter 5, the NBN Co’s activities in fixed-wireless and
satellite service areas should also clarify for residents the continuing
provision of voice services on existing infrastructure.
The committee welcomes evidence of the NBN Co’s engagement with consumer
and peak industry groups through the meeting of the ‘Consumer Reference Group’
in the development of public education activities.
The committee believes it is important that these stakeholder groups are
appropriately consulted and that their capacity to provide feedback to the NBN
Co is supported.
In addition, involving the experience of relevant community and
business stakeholder groups will also be valuable in the development of a
telecommunications-migration awareness campaign following the progressive
decommissioning of the copper network.
Public Engagement Activities
The committee believes that national leadership is required for the
coordination of public engagement activities relating to the NBN rollout.
National leadership for public education and engagement activities is important
to ignite the design and development of innovative projects that will maximise
the capability of the NBN. If Australia is to maximise productivity increases,
clarity and leadership are vital. This may require more detail than general statements
of ‘enhanced productivity’.
By doing so, Australians will be in a better position to take full
advantage of the economic and productivity gains which may be achieved through
the NBN. In this regard, governments at all levels may be able to learn from
the experiences of other countries in their delivery and utilisation of
national networks. Clearly there will be unique challenges that will distinguish
Australia’s approach through the NBN.
The committee is also of the view that these challenges will also create
new opportunities for innovation and connectivity.
NBN Co Website
The NBN Co website is designed to be the central information portal for
access seekers and consumers alike. Although significant quantities of
information are provided on the website, from a consumer’s perspective, vital
information should be readily accessible and centrally located.
The committee believes improvements could be made to consolidate the
rollout information and the forecasted dates for the commencement of work and
the activation of services. The interactive three year rollout map is a
user-friendly search tool that could be enhanced by providing other key
information such as:
n The date of the
commencement of work in service areas;
n The progress of the
rollout within the individual service area (expressed as a percentage);
n Exact date of
completion of the NBN rollout in the service area; and
n Information about how
to connect to the network and a list of retail service providers offering
connection services in that area.
The committee notes that much of this information is available on other
areas of the NBN Co’s website. However, a consolidated access point providing
this information is likely to assist the migration of customers throughout the
staggered rollout of the NBN.
Delay of Receiving Review Information
This is the committee’s fourth report since its appointment in March
2011. To date the committee has held ten public hearings, seven of which the
NBN Co or the departments have appeared at. At these hearings, the committee
placed questions on notice.
The committee has found that there have been occasions when it has
placed questions on notice during a public hearing, and answers to those
questions have referred the committee to media releases or already published documents
issued in the interim. It would be of assistance to the committee in its
oversight function if these responses to questions asked were thorough,
comprehensive and prioritised.
The committee has twice previously commented on the delays it has experienced
in receiving answers to questions taken on notice by the NBN Co and the
departments. The committee has also commented on the timeframe it requires for
receiving the Government’s NBN rollout performance report. The due dates and
timeframes are put in place to enable the committee to receive information that
it requires to report to the Parliament.
The committee is responsible for reviewing the six monthly rollout of
the NBN and takes this responsibility seriously given the large public
expenditure and time taken to enable the NBN to be completed.
In the Government’s response to the Second Report, the Shareholder
Ministers have stated that they are supportive of the committee’s
recommendation to review the DBCDE process for providing answers to questions
on notice to the committee. However, the Government then places a caveat on
this statement by explaining that it will take additional time to answer
questions if required.
The committee has again recommended that internal processes for the
approval of answers to questions on notice be changed to enable it to place
emphasis on providing information to the committee by the due date.
The committee recommends that the NBN Co and the Department
of Broadband, Communications and the Digital Economy review the efficiency of their current clearance processes for providing answers to questions on
notice so that:
n Responses to
the majority of questions placed on notice by the Joint Committee on the
National Broadband Network can be received by the due date;
n Its answers
to parliamentary committees are consistent, thorough and complete, so that
ambiguities are minimised in public debate.
The committee recommends the Government include key
performance information in its six-monthly National Broadband Network
performance report, listing and detailing: (1) established Business Plan
targets and (2) actual results for:
The committee recommends that the NBN Co as soon as
possible, provide further key information on its website in a user-friendly
format, and also include this information in the six monthly Shareholder
Ministers’ Performance Report. This information should include:
date of the commencement of work in individual service areas;
progress of the rollout in each service area (expressed as a percentage);
exact date of completion of the National Broadband Network rollout in each service
about how to connect to the network; and
list of retail service providers active in each service area.