NBN Co chief Bill Morrow says under Labor connections cost it up to $40,000

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NBN Co chief Bill Morrow says under Labor connections cost it up to $40,000

By Peter Martin

NBN Co had to shell out more than $40,000 to connect some hard-to-reach properties, in one case spending more than $90,000 when it was compelled to provide fibre to a property near Townsville in Queensland, according to figures to be released on Monday in a bid to counter a push to have it revert to the Rudd government's original target of 93 per cent fibre to premises.

The list of the 10 most expensive to connect locations in each state shows it spent $41,304 connecting a business in Strathfield in Sydney that needed concrete and bitumen broken to install a new conduit. It spent $51,464 connecting a business in Ballarat than needed 10 metres of bitumen broken and relayed.

"It's all very well to say leave no home left behind when it comes to fibre as was the original Labor requirement," NBN Co chief Bill Morrow told BusinessDay, "But boy, some of those homes are bloody expensive; you've got heritage homes and rock to drill through and they've often already got infrastructure in place you can use to get good speeds."

Mr Morrow was appointed in 2013 as the incoming communications minister Malcolm Turnbull abandoned the 93 per cent target and allowed NBN to deliver city connections by a mix of technologies including fibre to the node, fibre to the curb and the so-called HFC cables installed to deliver pay TV.

NBN chief executive Bill Morrow says the more the NBN charges the harder it will be to get people connected.

NBN chief executive Bill Morrow says the more the NBN charges the harder it will be to get people connected.Credit: Daniel Munoz

It cost an average of $4400 to connect premises purely by fibre and only $2300 using the multi-technology mix.

Mr Morrow rejected comparisons with the $3000 it costs the New Zealand provider Chorus to deliver fibre direct to premises.

"We are required to connect every premise. Chorus doesn't need to because it can leave the existing network in place," Mr Morrow said.

"In fact, they've told us, they struggle to get people to go over the fibre, because people are happy with the fibre to the node they've got and don't want any more."

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Bill Morrow says fibre to the premises would cost an extra $10 billion.

Bill Morrow says fibre to the premises would cost an extra $10 billion.Credit: Glenn Hunt

"Our rules require us to force people off. That means we have to supply every premise. Unlike Chorus which owns the existing network, we have to pay Telstra about $1000 for each of its customers we disconnect."

The Telecommunications Industry Ombudsman's annual report shows a sharp increase in the number of complaints about the NBN, often relating to delays in connections and missed appointments by retailers.

NBN boss Bill Morrow defends the organisation's performance.

NBN boss Bill Morrow defends the organisation's performance.Credit: Janie Barrett

Mr Morrow said one of the reasons for consumer frustration might be that for most purposes, ultrafast broadband provided little more than standard broadband.

"Much of the emotion geared around some of the poor experiences people are having relates to their expectations. They can't help but think this comes back to policy-based decisions and therefore technology-based decisions and that the government made the wrong decisions deploying the wrong technology and the whole thing's a mess.

"I've done tests in my own house. I have two kids that are on internet constantly, I have two university students in my house and there's two professionals. We're on the internet all the time."

"I said, alright you Stan users and Netflix users and YouTube users, I want you to get on and go for your maximum. I have a 50-megabit per second product. I tested it and we were using maximum of 10 megabits. So if I had just the 12 megabits, the basic low service, l would have felt no difference within my house."

"The only difference, and this is valid, is that if I've got a 100-megabit service versus a four-megabit or five-megabit, and I try to download a movie, it clearly is going to download faster. But my argument to those people who say they could get files faster is to say – great, you can download the National Library in an hour, but then what? What are you going to do with that 100-megabit service thereafter?"

"What's lost on a lot of the fibre zealots out there is that this isn't a free product provided with taxpayer money. We have to make a modest return. The more we charge, the harder it will be to get people connected.

"There are these small circles who say 'I want more fibre and I want it faster'. My reply is that it's not just about you, it's about everybody in the country. If everybody in the country had 25 megabits we would be far better off than you having a gigabit."

Asked how much more it could have cost to deliver fibre to 93 per cent of Australian premises as originally required, Mr Morrow said it would have been at least another $10 billion. Some of that would have been the extra expense, and some the lost revenue because it would have taken at least four more years to build, meaning delivery well beyond the current target date of 2020.

Mr Morrow rejected the suggestion that fibre to the premise would have been cheaper in the long run because of lower running and maintenance costs.

"It craps me up. You've got to remember we are talking millions of homes you have to spread the cost of electricity and extra technicians over. It's nothing. You would never be able to spend enough money on operations and maintenance to make up the cost difference, not over 50 years, not over 100 years."

Nor was it true that the Telstra pay TV hybrid fibre-coaxial being repurposed by the NBN was more expensive to get right than would be new fibre.

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"HFC is probably the most invested in infrastructure around the world and the most deployed infrastructure to provide superfast broadband to people's homes. People are employing it in brand new greenfield applications. We are seeing speeds of tens of gigabits per coming down, very low fault rates and very maintenance costs."

"Yes, it is true that the HFC network we got from Telstra is requiring far more of an upgrade than we originally envisioned. That was an oversight, or a lack of data that we had. But it still a far cheaper and far faster to deploy than putting fibre to every home."

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