NBN Co has declined to tell a Parliamentary committee how much it will spend to upgrade the national broadband network Hybrid Fibre Coaxial infrastructure through 2023, citing commercial confidentiality, as it works to accommodate a dramatic and sustained rise in bandwidth consumption in the wake of the COVID-19 pandemic.

Speaking to the Joint Standing Committee on the NBN in November, NBN Co CEO Stephen Rue originally said the company would be able to provide, on notice, details of its cumulative HFC capital expenditure through to the end of fiscal 2023.

However, over three months later the company has changed its tune, with its response to the question on notice offering no hard figures but noting only that the company “has moved into a more mature operational phase within a complex commercial environment.”

“NBN Co expects to make multiple approaches to the markets over the next few years,” the written response notes, adding that the company recognises “the need to carefully balance the requirement for high levels of transparency against any commercial harm that could arise from releasing certain information, such as long-term forecasts.”

Although higher-level figures about capital expenditure have been included in previous NBN Co Corporate Plans, the company warned that figures in those documents are “not updated or refreshed in a manner that would support any reliance by investors.”

NBN Co’s shareholder ministers – Minister for Communications, Urban Infrastructure, Cities and the Arts Paul Fletcher and Minister for Finance Simon Birmingham – agreed the figures should not be published.

Playing the numbers

The overhaul of NBN Co’s HFC assets – which it acquired from Telstra and Optus – is a critical part of its plans to boost revenues by offering 1Gbps broadband services to some 2m Australian premises by 2023.

The addition of new speed tiers last year outlined the company’s service plans in the long term, with NBN Co’s recently announced first-half results announcement highlighting its efforts to extend fibre-to-the-premises (FTTP) services into its ageing fibre-to-the-node (FTTN) network – and noting that 46 per cent of current HFC premises can access the NBN Home Ultrafast wholesale speed tier.

NBN Co’s rapid push to bolster service speeds comes as other new figures, also provided on notice last week after a three-month wait, showed that Australian broadband usage patterns changed dramatically during the COVID pandemic – with business-hours usage increasing by 42 per cent, on average, through October.

Compared with a pre-COVID baseline in late February 2020, average data usage per service increased by nearly 10 per cent for the April to October period, NBN Co confirmed – from 105GB per month per user, to 115GB per month per user.

But the change in upload data volumes told a far more relevant story: the pre-COVID baseline ratio of downloads to uploads was 12.3:1, but between April and October this surged to 9.5:1 – reflecting an increase from 8.5GB of uploaded data per month to 12.1GB.

This surge can be explained by the mammoth increase in videoconferencing usage during that time, but it has long-term implications on NBN Co’s architectural strategy because FTTN and legacy HFC services have not been able to deliver fast upload speeds.

NBN Co’s HFC investment is therefore a critical step in delivering faster and more profitable services to consumers – but even this hit a snag last month, with the company announcing that it would suspend new HFC service orders for several months due to a chip shortage affecting availability of key network termination devices.

Such issues will directly impact what telecommunications analyst Paul Budde says has become the company’s primary goal in recent months: to charge consumers more – and, in so doing, use low interest rates to accelerate its repayment of government funding and bolster its financials for an eventual sale.

With the government refusing to provide details around its planned investment, the lack of clarity around its financials – and a wholesale pricing regime that “basically is a tax or a punishment for the use of data” – will, Budde wrote, keep retail service providers (RSPs) struggling “to get a grip on their costs”.

“While [NBN Co] try to spin this in a positive way,” he wrote, “the industry calls the current pricing regime unsustainable. Tweaking this and repackaging some of it [with new wholesale pricing plans] is not really improving this situation.”

“RSPs need certainty regarding their costs in order to maintain a financially viable organisation [but] NBN Co wants us to pay more for existing services, giving us nothing in return.”