Major changes to the implementation of the national broadband network will be needed to avoid huge cost blow-outs and up to 300,000 homes missing out on high-speed internet, Communications Minister Malcolm Turnbull will warn in a speech on Wednesday.
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Mr Turnbull will tell the CommsDay telecommunications conference in Sydney that the likely demand for broadband in the areas where it is most costly to deliver has been dramatically underestimated.
While most Australians will have access to the national broadband network fibre, about 1 million households, most in regional areas, will depend on wireless and satellite services.
Mr Turnbull will announce that NBN Co’s latest modelling shows demand in non-fixed line areas has been underestimated by two to three times. This means there will be a take-up of up to 620,000 wireless and satellite connections instead of 230,000 connections.
"Put together, these problems mean that without policy changes, the project as planned would not be able to service an estimated 200,000 to 300,000 premises outside of the fixed line footprint," Mr Turnbull will say.
The problems are exacerbated by the fact NBN Co has not been able to secure spectrum for the fixed wireless network on the outskirts of major cities such as Sydney and Melbourne.
"Taken together, if the NBN were to take steps to eliminate the 'coverage gap', the company faces a deterioration of operating cash flows of its satellite and fixed wireless networks of up to $1.2 billion by 2021," Mr Turnbull will say.
Despite these dire forecasts, Mr Turnbull will say this does not mean the "broad promise of a national wholesale platform is dead" or that broadband users in the bush will not receive "metropolitan equivalent" services. But he cautions: "NBN Co – and by extension the government – cannot solve every problem simply by throwing more money at it.
"NBN Co needs to be flexible and pragmatic about which technology to use in each geographic location."
The NBN board is preparing recommendations to the federal government from a strategic review into the fixed wireless and satellite programs. The final review is expected to be released next week.
Mr Turnbull will say: "The government has to settle important industry questions while picking our way through a minefield of interlocking policies, laws and commercial obligations, where everything is connected and nothing is quite as it appears. It's a rum legacy. I sometimes wonder what Senator [Stephen] Conroy can have been thinking when he put this mess together – and then remind myself some questions are better left unanswered."
Last week, the government announced it would spend an extra $18.4 million on its interim national broadband network satellite service.
In a speech to CommsDay on Tuesday, NBN Co chairman Ziggy Switkowski warned that homes and businesses in 15 towns across Australia faced having phone and internet services cut off when copper lines that connected them were switched off in 45 days.
