NBN fixed wireless blowing out bush broadband bill as Government pins hopes on fixed-line levy

Extract from ABC News

By political reporter Jackson Gothe-Snape

Posted about an hour ago

Photo: NBN services in the bush have been hit by massive unexpected popularity. (Supplied: NBN Co)

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Wireless broadband in the bush is draining more money than expected from NBN Co due to take-up in some places being three times higher than projected.

Key points:

• Fixed wireless congestion is causing increased NBN roll-out costs
• Four out of five houses in some areas have taken up fixed wireless
• The Government hopes a new bill will raise extra money for bush services
  

New information released this week through Senate estimates has revealed delays to upgrades and massive popularity in some fixed wireless areas.
Residents around some towers have driven take-up rates of more than 80 per cent. In 2012, take-up for fixed wireless was predicted to be 23 per cent.
Almost one in ten premises in the NBN roll-out plan — approximately 1 million homes — are on fixed wireless or satellite technology.
NBN Co chief executive Bill Morrow told senators last week that new technology added in order to address congestion "exacerbates" the negative profitability of its bush service.
"It's not about making money in these areas," he said.
"The losses we see in these wireless technology areas are offset by the profits that we make in the city centres."
The financial contribution from users of these bush services is already being dwarfed by subsidies from metropolitan fixed line users.
Even as the subsidies grow as more metropolitan homes come online, the Government describes this cost shifting as "unsustainable".
The Government has estimated losses from the satellite and fixed wireless portion of the rollout — covering those in Australia's most inaccessible, and arguably most needy, areas — will reach $9.8 billion dollars over the next three decades.

Regional broadband scheme

The Government is pursuing a new bill that aims to extract tens of millions of dollars each year from urban non-NBN fibre networks to help fund bush broadband
It works by charging fixed-line companies in competition with the NBN $7.10 per month for each customer.
The scheme is expected to raise $30 million each year in the first few years of operation, and potentially more in future as new companies enter the market in competition with the NBN.
"The NBN operates in a competitive environment and always has," a spokesperson for Communications Minister Mitch Fifield told the ABC.
"Competition will only increase in future.
"It is critical that high-speed broadband in regional Australia is sustainably funded."
Michael Sparksman, managing director of OPENetworks — a non-NBN carrier set to pay more under the scheme — said the "flat" tax hits affordable broadband services hardest and makes broadband more expensive for people on low incomes.
The scheme is likely to face opposition in the Senate.
Labor's communications spokeswoman Michelle Rowland has described the bill as "regrettable", while the Greens' NBN spokesman Jordon Steele-John was also critical.
He told the ABC the proposed scheme was "poorly designed" and that it would "potentially distort the telecommunications market".
Other crossbench senators contacted by the ABC are still assessing the legislation.

The $9.8 billion problem

"Regional Australia has traditionally been left behind when it comes to telecommunications," an NBN Co spokesperson told ABC.

Photo: Congested fixed wireless towers are currently being upgraded by NBN Co. (Flickr: Beau Giles)

"For the first time ever, these areas have been able to access broadband speeds not available to many in metro areas because NBN Co has prioritised the rollout in regional Australia."
It has come at a significant — and growing — price.
Even as fixed wireless is connected to more houses, it's getting more expensive to connect each house.
Since June last year, NBN Co has reported the cost per premises for fixed wireless has increased by more than $100 to around $3700.
Government figures peg losses per premises at $105 per month for fixed wireless services and $110 per month for satellite services.

Congestion relief delayed

New information released by NBN Co this week reveals struggles to meet its own timeframes for upgrading congested wireless towers.
Three of the nine towers targeted as priorities have suffered upgrade delays: Worrolong in South Australia and Smythesdale and Clunes North in Victoria.
The ABC sought explanations from NBN Co for the delays.

• Worrolong is now set to be completed in July, four months later than anticipated, due to a need for a shelter for additional radio equipment on the tower.
• Clunes North was delayed by two months due to a change of sub-contractor and replacement of faulty equipment. It is now complete.
• Smythesdale suffered a similar delay due to a need for strengthening on existing Optus structure requiring an additional lease area.

$2 billion in capital costs has been spent so far to build the fixed wireless network.
Last week Mr Morrow admitted NBN Co had "killed" its plan to offer fast 100Mbps plans to fixed wireless users.