Greater transparency of the subcontractors helping to deliver the National Broadband Network is required says one academic, as NBN Co reveals a $1.4 billion cost blowout to the project.
NBN Co yesterday released its Corporate Plan for 2012-2015, and reaffirmed its commitment to the underlying business case for the network, which it says will deliver a 7.1% annual internal rate of return. However the project continues to be delayed, with an additional six months now added to the ten-year construction period.
Construction activity is set to peak in 2015, with construction commenced or completed for 3.5 million premises, but by the end of June this year construction had only occurred at 305,000 premises.
NBN Co continues to be criticised for the “glacial” pace of the rollout, said Dr Mark Gregory, Senior Lecturer in Electrical and Computer Engineering at RMIT University.
“There’s been no massive windup to actually doing the rollout. It would be like the Snowy Mountains Scheme trying to build the whole thing with 1,000 people.”
Dr Gregory said more scrutiny should be placed on the role of subcontractors doing the fibre installations.
“With the Snowy Mountains Scheme people could see the total number of people hired by the Snowy Mountains Scheme and feet on the ground,” Dr Gregory said.
“The revised plan provides guidance that the fibre rollout has been delayed and projections are provided that indicate the ramp up period extends through to 2015.
“The rate of this ramp up period appears to be very slow prior to 2015 and then the rate of installation is projected to be the no better than the cable rollout that occurred nearly 20 years ago.”
Dr Gregory said it was in the interests of subcontractors to see the project take as long as possible, but that given the project was being seen as a “nation building exercise,” effort should be being made to try to significantly beat the rollout targets.
“I would have expected every effort to be made to get the fibre rollout done in record time.”
Utilising subcontractors for the fibre rollout meant there is insufficient transparency about the rate of the rollout, Dr Gregory said.
“The projections are heavily back loaded to 2015 so it is possible the rollout could be significantly behind schedule and there would be no way for the public to know this until mid-2016.”
Dr Gregory also said Australians should be able to see on a map, in real time, every street in Australia as it becomes active on the network. “Active” is where the premise could have a NBN service within a couple of days after signing up with a retail service provider.
“This would be great transparency that would allow us to measure the rate of the rollout and to experience it happening,” Dr Gregory said.
On the issue of the cost blowout, which amounts to 3.9% of the project, University of New South Wales economist Tim Harcourt was unsurprised.
“I would expect that with quite a large project you’d have a 3% increase, that’s quite possible,” Mr Harcourt said.
Mr Harcourt said the cost and time blowouts needed to be considered in the context of the entire project.
“You make these investments, the roll out seems to take a long time, but then when you look at the benefits over several decades it’s a blink of an eye isn’t it?
“What were the benefits of the float of the dollar? Well we saw them in the GFC and that was, what, 25 years after?”
Mr Harcourt said the biggest problem he could see for the project was the speed of technology advancement.
“Does technology move so fast, does something knock it off and make it obsolete in five years?”