Chapter 1 Introduction
The Shareholder Minister’s Third Performance Report (the Performance
Report) on the rollout of the National Broadband Network (NBN) details
performance information relating to progress of the NBN rollout for the six
month period from 1 January to 30 June 2012.
Since the second Performance Report, the NBN Co Limited (NBN Co) has
revised its performance targets and issued a new Corporate Plan.
The new corporate plan ‘incorporates the following major changes when compared
to the’ …previous…’corporate plan:’
- ‘Changes in the scope
of the overall project resulting from:
inclusion of the Optus HFC Agreement in the Corporate Plan forecasts; and
latest assessment of the impact of implementing a number of policy requirements,
including the full impact of the New Developments policy announced in December
2010 and revised in June 2011; the impact of the 121 semi-distributed Points of
Interconnect decision; and the requirement for NBN Co to rollout the Fibre
network in all the current Telstra Band 1 and Band 2 copper exchanges.
- Other changes since
the 2011-13 Corporate Plan resulting from:
impact of the delayed Commencement Date of the Telstra Definitive Agreements,
which has led to a corresponding delay in the start of the volume rollout;
Capital Expenditure and increased Operating Expenditure as a result of more
infrastructure being accessed under the Telstra Definitive Agreements; and
Capital Expenditure during the Construction period to FY2021 as a result of
adopting a ‘Build Drop’ strategy for connecting premises to the Fibre network.’
These changes in scope outlined in paragraph 1.4.1 of the 2011-2013 Corporate Plan have contributed to a
‘decrease in capital expenditure during the construction period, an increase in
operating expenditure to 2021 and’...an overall ‘reduction in revenues to’ 2021
‘compared with the’ previous corporate plan. The NBN Co has attributed
the changes to its financials, but not limited these changes to the:
- ‘Delayed commencement
of volume rollout
- Increased Telstra
- Accelerated Customer
In regard to outstanding regulatory issues, the NBN Co Special Access Undertaking (SAU) has been withdrawn,
revised and resubmitted to the Australian
Competition and Consumer Commission (ACCC) for formal consideration.
Pursuant to its Resolution of Appointment (RoA) and in accordance with
its terms of reference, the committee is required to report to the Parliament
and the NBN Shareholder Ministers every six months ‘until
the NBN is complete and operational’.
The committee is primarily enabled to examine and report on matters
relating to the NBN Co’s objective to connect Australian premises to the NBN
- the achievement of
take-up targets as outlined in the NBN Co Corporate Plan
- Progress of the NBN
rollout and performance matters relating to the NBN Co such as consumer
engagement, complaint handling, risk management and
- ‘any other matter
pertaining to the NBN rollout that the committee considers relevant.’
To date, the committee has reviewed and reported on a number of
significant and ongoing issues associated with the NBN rollout which include:
- NBN rollout across
the three technologies of fibre, wireless and satellite
- issues raised and
faced by regional and remote areas
- regulatory issues
associated with establishment of the NBN
- E-readiness of small
business, communities, governments and individuals and associated consultation
by the NBN Co
- funding arrangements
directly and indirectly associated with the NBN
- Telstra workforce issues
associated with the Retraining Funding Deed under the Binding Definitive
Agreement between the NBN Co and Telstra Corporation (Telstra).
The Shareholder Ministers’ Performance Report provides an overview of
the NBN Co’s progress in managing the NBN rollout for the six month period
ended on 30 June 2012. In addition, information covering the period from 1 July
to 1 October 2012 has been included in the Performance Report. As a result, as
contained in previous reports, the committee is again able
to follow and report on matters progressed and on current issues.
Information contained in the Performance Report forms the basis of the
committee’s six-monthly review, and is supplemented with submissions, published
reports, hearings and questions placed on notice which are part of the formal parliamentary
committee inquiry and review process.
The committee has in its First, Second and Third reports commented on:
- specific key
performance indicators to be included in future Shareholder Minister’s reports,
- the delay in
receiving answers to questions placed on notice with the NBN Co and the
Department of Broadband, Communications and the Digital Economy (DBCDE).
The committee is continuing its pursuit of these matters in its Fourth
Through its RoA, the committee is required to report to the Parliament
every six months on the progress of the NBN rollout. With agreement from the Shareholder
Ministers the committee reports biannually in June and December.
In line with reporting requirements, the committee previously reported
(Third Report) in June 2012 on the progress of the six monthly NBN rollout
period from 1 July to 31 December 2011, and a number of regulatory events that
took place outside this six month timeframe. These events flowed on into the
first half of 2012.
This is the committee’s fifth report on NBN related matters and the
fourth NBN rollout review report. The Fourth Report includes examination and
comment on the progress of the six monthly NBN rollout from 1 January to 30
June 2012, as well as discussion, where relevant, on current matters associated
with the NBN rollout.
The Fourth Report also includes continuing examination and commentary on
the progress of the NBN rollout and associated regulatory matters, initially reported
on in the First Report.
About the Review
Objectives and Scope
As part of its Fourth Review, the committee examined and provided
- The NBN rollout
through the fibre, satellite and fixed wireless networks and associated issues
such as service delivery, community consultation, public education and
- KPIs included in the Shareholder
Ministers’ six monthly performance report;
- ongoing regulatory
and pricing issues.
The committee has also continued its examination of:
- The potential of
private equity to fund the NBN, and
- Telstra workforce
issues associated with the Retraining Funding Deed under the Telstra Agreement.
A media release issued on 20 June 2012 announced the commencement of the
Fourth Review and called for submissions to be received by 3 August 2012.
In addition, a similar advertisement appeared in The Australian on
11 July 2012.
Appendix A lists the 28 submissions and three exhibits received as part
of the Fourth Review.
The committee subsequently held four public hearings in Canberra on
26 June, 14 August, 9 and 30 October 2012.
Witnesses who gave evidence at public hearings are listed at Appendix B.
Transcripts of the public hearings are available at www.aph.gov.au/jcnbn.
Information Provided to the Committee
The committee has previously reported on the limited information
provided to it by the NBN Co and the DBCDE in reference to its Third Review. More
specifically, the committee has noted the continued lateness of receiving pertinent
answers to questions on notice, and the unnecessary pressure this has placed on
the committee’s reporting timeframe.
In an effort to assist both the NBN Co and the DBCDE to provide answers
to questions on notice within an acceptable timeframe, individual members of
the committee placed a number of questions on notice for response in advance of
between six and two weeks of the 30 October 2012 public hearing. By the 30
October 2012 hearing, only five answers to the 17 questions placed on notice had
been received by the committee.
Following the public hearing on 30 October 2012, the committee was
informed via correspondence from the DBCDE that it would receive answers to
questions on notice ‘at the earliest opportunity and to the best extent
possible’ the DBCDE ‘will endeavour to meet the committee’s deadline.’
Over the course of three weeks, the committee received the majority of
its answers to questions on notice which enabled it to adequately finalise its
report. Additional comment about information provided to the committee during
the course of its Fourth Review is included in Chapter 2.
Committee’s Visit to New Zealand
From 24 to 28 September 2012 the committee represented the Australian
Parliament in the reciprocal Australia New Zealand Parliamentary Committee
Exchange Program (NZCEP). As part of its New Zealand visit, the committee met
with private and public sector individuals and organisations involved in the
design, development, and implementation of the New Zealand high speed broadband
In addition, the committee met with parliamentary representatives
including the: Minister for Communications and Information Technology, Minister
of Commerce, Spokesperson for Economic Development, Commerce Select Committee,
previous members of the Finance and Expenditure Select Committee and the
Speaker of the New Zealand Parliament.
As part of its visit, the committee undertook a half day inspection of
fibre and copper broadband network infrastructure, including the central
exchange in Wellington.
The Visit Report attached to this report includes an overview of New
Zealand’s experience in the development and early build of its high speed
broadband network and associated issues, as well as a summary of the issues
discussed by Members.
Chapter 2 examines the six monthly NBN rollout performance information
and associated issues. This includes discussion about the revision of targets
and key performance indicators contained in the new NBN Co Corporate Plan.
Chapter 3 continues discussion of the regulatory and pricing issues
associated with the rollout of the NBN. Matters discussed include: the ACCC
review of the NBN Co SAU and developments relating to the term of the
Wholesale Broadband Agreement.
Chapter 4 continues examination of issues associated with the NBN
rollout to regional and remote Australia through the fibre, satellite and fixed
Chapter 5 discusses additional issues relating to the NBN rollout such
as medical alarms and the connection of multi-dwelling units.
Chapter 6 examines issues associated with private equity engagement in
funding the NBN. It also considers Telstra workforce issues associated with the
Retraining Funding Deed under the Telstra Agreement.
The committee’s report on the 2012 NZCEP is included following the body
of this report as a stand-alone chapter. The delegation report contains a
summary of the information presented to Members and the associated issues
discussed during the committee’s visit to New Zealand.