The government's delivery deadline for the NBN looks likely to be blown out, a leaked report shows. Source: AAP
COST blow-outs, ageing copper, lower revenue and demanding deadlines.
The national broadband network (NBN) has struck another hurdle, with NBN Co chief Ziggy Switkowski telling a Senate hearing on Friday the cost of connecting homes and businesses now looks "materially higher" than all previous predictions.
Days before NBN Co is due to finalise a strategic review into the nation's largest infrastructure project, Dr Switkowski said costs were "rising as we speak".
"Many of the cost elements that NBN made about the rollout, that date back six months to a year, are so far away from the experience that I wouldn't use them to draw any conclusions," he said.
"The actual costs versus what I've seen to be in plans, there's a big gap."
Dr Switkowski's comments cast doubts over figures provided to the committee this month by NBN Co chief financial officer Robin Payne.
Mr Payne said the cost of connecting customers to the NBN had risen from $1100-$1400 in the 2013 draft corporate plan to about $1500.
Labor Senator Stephen Conroy blamed Dr Switkowski's predictions of "substantially higher" costs on renegotiations with contractors.
"If you choose to pay more money to settle contract disputes from companies that have failed to deliver on their contracts, that's on your head," Senator Conroy said.
Dr Switkowski replied: "I accept that."
The Senate committee in Canberra also heard that on top of Dr Switkowski's $180,000 annual salary as NBN Co chairman, he was earning $50,000 a month as acting chief executive for three and a half to four days' work a week.
Earlier in the hearing Dr Switkowski admitted it would be "tough" to meet the federal government's 2016 delivery deadline for the NBN, saying the next calendar year would be one of "stabilisation and transition".
The coalition has promised to deliver broadband services of 25 megabits per second to all homes by 2016.
"The end of 2016 as a deadline is very, very demanding," he said.
Senator Conroy asked whether talk of "transition" meant a decision on switching to a fibre-to-the-node (FTTN), or street corner, model had been made.
Dr Switkowski replied it was "the most probable scenario".
"It will have a higher element of FTTN than the current plan," he added.
Dr Switkowski's deadline comments mirror those in a brief note given to the incoming government, published by Fairfax Media, which stated that the 2016 target might not be met due to construction and technical issues.
The document also cut revenue projections by up to 30 per cent by 2021.
That was backed up by comments to the Senate hearing by Department of Communications secretaries on Thursday, who admitted a move from the fibre-to-the-premises NBN model for the cheaper but much slower FTTN would result in lower revenue projections.
The hearing also heard on Thursday from the communications union, which predicted up to 80 per cent of the copper wire pits NBN Co was planning to buy off Telstra were in a condition so "disgraceful" they had to be patched together by plastic bags or ring-barked cables.
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