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Oz broadband network costs balloon

By Loyiso Lindani, Editorial Assistant
Johannesburg, 10 Aug 2012

Oz broadband network costs balloon

The estimated cost of building Australia's national high-speed broadband network has risen, marking a wobbly start to a key policy initiative of a government that is struggling to survive, The Wall Street Journal reports.

The cost has risen by about 4% to 37.4 billion Australian dollars ($39.4 billion) and completion of the build-out has been pushed back by six months to 2021, lawmakers said on Wednesday. The higher costs are partly due to a decision to lay more cable than initially planned, according to state-backed NBN, the company assigned to build the network.

Australia's minority Labour government, facing an election next year that it is tipped to lose, attempted to play down the significance of the overruns, rejecting suggestions of a cost “blowout.”

Opposition communications spokesman Malcolm Turnbull jumped on the blowouts, The Age, states.

'”Labour's National Broadband Network is falling disastrously behind every benchmark the government has set for it except one - the amount of taxpayers' money being spent,” he said in a statement. “NBN Co may not be able to put together a budget or roll out a network, but it knows how to take care of itself.”

Turnbull has said previously that a Coalition government would deliver broadband services through a cheaper and quicker plan, albeit at slower speeds. He renewed his call for a cost-benefit analysis by the Productivity Commission.

NBN says as of the end of June this year it had commenced or completed construction for approximately 305 000 premises, ABC News reveals. That is below the targets set in the first business plan back in 2010.

The timeline for construction has been extended because of the delay in getting an agreement with Telstra to decommission the copper network and provide access to its underground pits and ducts.

Operating expenditure has also gone up, from $23.2 billion to $26.4 billion, but NBN is still predicting a rate of return of 7% or more.

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