NBN Co has abandoned plans to privatise and will instead focus on “upgrading and improving” its network as well as meeting net-zero emissions targets, the company has confirmed as its latest strategy document repositions it for years of significant disruption.
The new Corporate Plan 2023, which bowed in the days before Christmas, reflects the expectations of the Albanese Government’s revised Statement of Expectations (SoE) document given to the company on 19 December.
That document – the eleventh formal guiding document for NBN Co since the company was established in 2009 – formally dispatched with the idea that NBN Co was being primed for sale to a private buyer, shifting its priorities from revenue generation to improving the services it offers.
The Albanese Government “expects NBN Co to be highly efficient to support affordability for consumers, and also promote competition and innovation,” Minister for Finance Katy Gallagher said as the SoE was released.
NBN Co was pushing for price increases that would have shored up its bottom line to improve its appeal to buyers, but its proposed Special Access Undertaking (SAU) was rejected by authorities last year as the new government shifted the network’s focus to more immediate concerns such as service quality, speed, and affordability.
“The Government will keep NBN Co in public hands for the foreseeable future to provide the Company with the certainty needed to continue delivering improvement to the network while keeping prices affordable,” the SoE notes.
Bolstered by the government’s allocation of $2.4 billion in its October Budget, key priorities for NBN Co now include areas such as disaster readiness, promotion of competition, and providing around 10 million premises – 90 per cent of the fixed-line footprint – with 1Gbps speeds by 2025.
It will also push hard to improve its environmental credentials, with chair Kate McKenzie and CEO Stephen Rue committing to “proactively managing the impact of physical and transitional climate-related risks” – such as bushfires, floods, and storms.
NBN Co – which last year touted its investment in a Wyalong, NSW solar farm that will supply 19 per cent of its total power needs – will also improve energy efficiency across its network as it works to meet its target of purchasing 100 per cent renewable energy from the end of 2025.
“The success of the NBN network underpins Australia’s global competitiveness and the economic future of the nation,” McKenzie and Rue said in outlining the company’s priorities in coming years.
“Through ongoing investment in the evolution of the network,” they said, “we aim to deliver on our purpose to lift the digital capability of Australia and meet the growing digital needs of households, business and communities, now and in the future.”
Turning the ship
The new corporate plan is just the latest in a series of major documents that will shape NBN Co’s future during the course of 2023.
In late November, the company released a revised SAU proposal that would address long-held industry concerns by eliminating costly capacity virtual circuit (CVC) charges that had disincentivised retail service providers (RSPs) from providing unlimited high-speed broadband services.
The waning days of 2022 also saw NBN Co release an updated Wholesale Broadband Agreement Consultation Paper, which will guide the industry consultation process through which NBN Co hopes to have the new SAU implemented by 1 July this year.
Close collaboration with regulators and industry players will be crucial to the success of the new corporate plan, McKenzie and Rue said.
“By working closely with the ACCC on the framework that is used to regulate wholesale access to the NBN network,” they explained, “NBN Co aims to provide more certainty for RSPs, while enabling the company to achieve a stand-alone investment grade credit rating and ensure it is financially resources to be able to invest in the network.”
That credit rating will be crucial to helping NBN Co secure further private-sector loans to help it wean itself off its financial dependence on the government, with the company aiming to repay its government loan by June 2024.
That’s a significant goal, given that a recent Productivity Commission review of NBN Co’s past operations concluded that poor past architectural decisions – encapsulated and regularly revised in previous Corporate Plans – had created considerable “unanticipated costs” and left NBN Co with “poor prospects” of ever paying its debts.