Senate Estimates October 2018: NBN Co CEO Stephen Rue's opening statement

Thank you Chair.

With me here are Ziggy Switkowski, our Chair; Peter Ryan, Chief Network Engineering Officer; and Brad Whitcomb, Chief Customer Officer of our residential business.

I want to start by thanking Bill Morrow for his leadership over the last four years; he is an outstanding CEO who focussed on motivating and engaging the people of nbn™. Under his direction we achieved remarkable results that set the company up for continued success.

As CFO during that time I saw the dedication, talent and determination of nbn's™people to build the systems and processes to meet every challenge.

But, there is something more than metrics and milestones that drives people working at nbn™, and this is true for me as well.

We know that fundamentally we are changing lives for the better.

One of your colleagues gave us a great example of this by sharing a letter from a 10-year old girl.

This girl had very poor internet access and couldn’t do her homework, so she had to use the school connection in her lunch-hour.

She said that with the nbn™at home she can research online, watch instructional videos and use programs like Mathletics, which help her learn.  

The best thing, though, was that she can play with her friends at lunch rather than being stuck in the library.

We talk a lot about the “what” and the “how” of  nbn™, but stories like this go to the “why” of  nbn™.

We are building a national asset that contributes to people’s lives and to the economy, and that is what makes it such a privilege to lead this company.

We now have close to 7.5 million premises ready to connect, 4.4 million premises activated and 99% of the country is either in design, under construction, or complete.

But with 2020 just one full financial year away, we see a paradox emerging: we are very close to our goal, but there is still a long way to go.

We need to add 2.8m premises this financial year, which is more than 10,000 premises every working day. These are big numbers, but remember that in FY17 we showed what is possible when we added 2.6 million premises.

It is not all about pace, though, as you well know; customer experience is vital to our business strategy.  The best protection against future competition is a fully operational network that is affordable and beating expectations.

We are seeing significant improvements in this space. We reduced average network congestion to 38 minutes per week, down from approximately 4 hours a year ago.

Back then just 16% of connections were on a 50 mbps plan or higher.  Now that sits at 50%.

These plans are many times faster than the old ADSL connections, so people are now seeing the true value of moving to the nbn™.

With installations, we get 94% right the first time, up from 86% a year ago.

Network faults are down to just 8 faults per 1000 premises per month, but when issues do arise, we’ll fix 91% first time, up from around 70% a year ago.

The time it takes to provide that fix has fallen by 65% from 105 hours last October to 37 hours.

This focus on customer experience comes at a cost, and this is reflected in our Corporate Plan.

I have often had to say to this Committee that the answer to your questions will be in the Corporate Plan, particularly about the HFC pause and the pricing changes. Now that the plan is finished I am very happy to go into much more detail.

The plan shows an increase in peak funding, taking us to the upper end of the forecast range.

This is driven by:

• a further $800m capex for capacity upgrades for Fixed Wireless
•  $700m due to the pricing changes
• $700m from the HFC pause and $200m extra capex for HFC network optimisation

The Government’s investment remains at $49b, with additional funding to be sourced from private sector debt.

Because of those decisions, we’ve seen substantial improvements in customer experience, and also a reduction in TIO complaints in the final quarter of FY18, which we’re seeing continue into FY19.

The fixed wireless spend is also in the name of customer experience as it lifts the busy hour performance to a 6 Mbps minimum average. This is an important investment in customer experience in the bush.

And although three quarters of regional areas are covered by fixed-line technologies, around 14% do rely on our fixed wireless network.

I don’t want to downplay the challenges around fixed wireless.  It is a great technology, but it is a victim of this success.

Take-up has far exceeded the early forecasts, the demand for data is growing quickly and the huge increase in video streaming means more simultaneous users are on this shared resource.

There is a multi-pronged strategy to address this, involving physical infrastructure upgrades, software enhancements, and consulting on changes to our products.

The extra money for fixed wireless, all the pricing changes, and the HFC pause all have the same aim: to make the nbn™ experience the best it possibly can be.

The little girl’s story I mentioned is just one person’s experience of nbn™. When you multiply these stories across communities, society and the economy, you see the real value of the nbn™.

We know through the Alpha-Beta research that nbn-connected areas have higher rates of business growth and more digital jobs. The proportion of self-employed women is 20 times higher in these areas.

That research estimates nbn™ will drive an additional $10.4 billion in economic activity annually by FY21, with the estimated business growth creating 31,000 new jobs by the end of the rollout.

The old conversations about the nbn™ are, I believe, growing less and less relevant. The nbn™is here. Its users number in the many millions, it is making a difference in people’s lives, and the finish line is close.

The conversations I look forward to are about how the nbn™ can best contribute to the economy, foster innovation and ensure all Australians have more opportunity well beyond 2020.

With that, we are pleased to be able to take your questions.