NBN Co’s new network repair costs on copper revealed

­The NBN is facing a $640m bill to repair and replace parts of its decrepit copper network.

­The company building the government’s National Broadband Network is facing a $640 million bill to repair and replace parts of the decrepit copper network it bought from Telstra to underpin the nation’s biggest-ever infrastructure project.

Confidential NBN documents obtained by The Australian reveal the company is looking at a tenfold blowout on what it originally thought it would cost to ­remediate the old copper network that forms the basis of the Coalition’s fibre-to-the-node rollout.

The leaked documents for the first time reveal the cost that the NBN will incur to fix the copper network it bought from Telstra last year in an $11.2 billion deal.

NBN expects to spend $26,115 per node to fix Telstra’s copper lines to ensure it can deliver the speeds and service quality promised for Malcolm Turnbull’s mixed-technology network.

The documents make a mockery of the assumptions contained in a 2013 strategic review, prepared after the Coaliton won power, which put the cost of remediating copper connections at just $2685 for each node.

Each node is a small fridge-sized, fibre-connected box that sits on street corners and connects to Telstra’s copper network to ­deliver super-fast broadband speeds to homes and businesses.

With the NBN planning to build 24,544 nodes by the end of 2019 — each of which will connect up to 178 premises — the total bill to fix faulty copper lines will be about $641m. The documents also reveal that a further $520m is ­expected to be incurred by NBN for connecting “high-cost premises”, which are homes and businesses located at unusually large distances from nodes.

The NBN distanced itself from the figures in the documents, saying they were a draft that had not been endorsed by the executive committee of the company.

A spokesman for the NBN said any costs to remediate the copper network were contained in its cost projections for FTTN connections, which come in at $2300 per premise. In comparison, the cost to connect homes and businesses to the fibre-to-the-premise network favoured by Labor was $4400 for each site.

Once construction of the NBN is complete in 2020, about 38 per cent of homes and businesses will be passed by the FTTN network, 20 per cent will be passed by FTTP and 34 per cent will be passed by what used to be Telstra’s and Optus’s cable networks.

While the NBN’s technology mix was supposed to be vastly cheaper to deploy, the company revealed in August that construction costs would be increased to between $46bn to $56bn, up from its original estimate of $41bn.

The internal NBN documents warn that download and upload speeds on the network could suffer if remediation work is not completed. This would create additional burdens on connecting premises and hamper timely ­migration to the new network.

“(The) state of the copper network is considerably worse than expected, leading to extensive work beyond the node,” the documents say.

The documents describe the possibility that the task of fixing the copper network could be of a greater magnitude of risk, which is “almost certain” to occur.

With remediation works added in, the cost of each node is $244,150 which is about 2.3 times the $104,762 price assumed in the 2013 strategic review.

The revelation of the expensive copper remediation costs will raise questions about the NBN’s due diligence process and disclosures by Telstra when the two parties signed their $11.2bn deal for transfer of the copper network.

In August, about eight months after NBN and Telstra signed off on that deal, NBN chief executive Bill Morrow said the company still did not fully know the quality of the copper network and how much it would cost to remediate.

“Malcolm Turnbull bought back the copper network John Howard sold and remarkably, he didn’t even do his due diligence to see what kind of shape it was in,” said opposition communications spokesman Jason Clare.

There has been much criticism of the government’s decision to go with FTTN, with critics arguing Telstra’s old copper network is too old and rundown to deliver the broadband speeds that will be needed in the future.

Despite this, FTTN trials have produced good results for the NBN, delivering download speeds of 100Mbps and upload speeds of 40Mbps for residents who live within 400m of a node.

The release of NBN’s copper remediation costings is the second damaging leak to come from within the government-funded network builder in just a week.

Last week it was revealed the NBN had drawn up plans to replace the Optus cable network in a move that could cost the project $375m and make it miss its 2017 and 2018 connection targets.

The NBN paid $800m in 2012 for the Optus hybrid-fibre coaxial network — which is used to deliver broadband and pay-TV services — but the company has since discovered that large portions of the network are in such poor condition that they will need to be replaced to deliver super-fast internet access speeds.

Minister for Communications Mitch Fifield said the NBN had a solid track record under the ­Coalition. “The multi-technology NBN rollout will require around $30 billion less in peak funding compared to reverting to a fibre-to-the-home plan and it will be finished by 2020,” he said.