NBN: An Investment in Fibre Optics and Future Broadband

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Investing in the NBN has many facets. It is aimed at revenue generation, and also quality of service, and operational standards. Its main investors include the Federal Government, internal stakeholders, businessmen, retail service providers, and the common subscribers. Whether the investment is in primary funding, or operational options for its future, these are all huge undertakings.

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Investing in the NBN involves direct funding for major operations within the company. It also includes non-revenue generation aspects of its operations. And this also includes the external or outside groups, such as the work by service providers or third party, indirect applications of the NBN that involves various online activities and markets.

That first part belongs to the upper tier of investors: the Federal Government, internal stakeholders, and businessmen, who are directly involved with the NBN as a wholesale product. Those in the external part belong to the second level of retail, primarily comprised of the retail service providers, business owners not part of the NBN internal infrastructure, and subscribers and their way of using the NBN service for their own returns.

The NBN Annual report for 2015 – 2016 shows a total A$734 million budget used for the FY2016. To date, the government had a huge contribution to this capital, amounting to A$20,275 million.

It won’t be until 2021 when the NBN Co. will start paying back the Federal Government. The target is to finish payments by 2034. The projected return of investment is at 7.1% which when calculated should amount to at least A$23.1 Billion by 2021 when the company actually starts paying off the government investments back.

In its initial phase, the plan was to have a capital expenditure of A$43 Billion, which went down to A$37.4 billion. The actual amount from the Federal Government started at A$30.4 Billion, with the rest coming from the private sector and other stakeholders.

For investors in and out of the NBN business scene, the fibre optic based broadband service is currently a high profile investment deal. Copper is gradually being eclipsed by Fibre Optic broadband technology. It is growing in size and development, along with its current three year plan roll out campaign for national coverage.

With different NBN formats, including fixed wireless NBN and Satellite NBN now available, the company aims to push for nationwide coverage with respect to suitability of the service in different situations and conditions. There are three main formats to choose from, available in many budgets and classes, and offering a large market for mobiles and other devices too.

Fixed wireless NBN and Satellite NBN are newer, but are projected to meet two new emerging markets: rural / remote areas, and increased mobile usage. Fixed line connections remain the top product / service, and account for most of the connections and ground work, but investments in the first two former have been increased to meet demand as well. These investments include the recent Sky Muster satellite NBN operations (amounting to an investment of A$ $135 million) and more presence of Fixed Wireless spots and facilities.

There are different types and levels of involvement when it comes to investing, and of the management of investments. We also have to be aware that there are certain guidelines to make sure the NBN investments are also properly set up; especially its operations and skills involved which will dictate its run, financial revenue, and benefits to investments and investors.

The main investors have the most shares in funding and development, and are all directly involved within its wholesale operations. The Federal Government, internal stakeholders, and businessmen directly involved with the NBN are the group of upper tier personnel that have bigger control over options and achieving of results.

Revenue generation and meeting all approved plans are two of their main key goals. They are also involved with making decisions that pertain to long term NBN operations, and improvement of quality and performance with regards to the company and the wholesale product.

Aside from investing in the revenue making elements, other investments in the NBN are internal.They may also be in the form of improved facilities, operations, processes, and other internal factors.

These are all used within to generate revenue while creating quality results and services in the achievement of company goals, financial and otherwise. These also involve those within the external investors that are not directly involved with the running of NBN.

Most of this is allocated for the following:

* network platforms to support the operation of the access technologies
* network operating tools to support the field workforce
* developing back office systems
* ongoing network releases to support product development
* fit out costs for commercial properties

From these main expenditures, NBN Co. coordinates prioritisation of public access to NBN, which involves branching out services to remote and rural areas with Satellite NBN and Fixed Wireless NBN, as well as the option to choose the format through their Technology Choice Program. There is also special emphasis on commercial properties for broadband mass usage.

The company also takes into consideration the internal operations involved, from outdoor work to simple back office systems. This is to maintain efficiency in both aspects of their roll out campaign and daily operations. This includes development of products that would benefit their operations long term.
There is risk management in place to keep operations on track and make sure NBN’s global quality standards are met. This is to secure these investments and maximise the growth and revenue involved. Risk management is mostly involved with protecting these investments.

As part of its Risk Management practices, there are also other minor NBN investments that are branched out. They are smaller goals all aimed for continuous improvements and operations and expansion of NBN operations, concurrent with the roll out campaign goals headed for 2018 (‘the three year campaign’):

* process improvement activities
* resource capability
* IT systems to meet the workload
* augmenting resources by procuring external service providers and contractors
* pilot trials of new technologies

These all point towards continuous development of their operations, in particular with easing of internal processing, management of resources, meeting consumer demands. It also keeps up with new technologies with respect to NBN delivery and subscriber / market trends.

 

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