Home Industry Deals The billion dollar NBN deal – but for how long?

The billion dollar NBN deal – but for how long? Featured

Leighton subsidiary Visionstream has won one of the largest NBN construction deals to date, with a contract for fibre rollout in the Eastern states. The total contract could be worth up to $1 billion. But will it survive a change of government?

Visionstream’s contract with NBN Co is for the roll out of broadband fibre from Fibre Access Nodes (FANs) to homes in Victoria, Queensland and southern NSW. Visionstream says it is valued at “up to” $334 million over two years, with two one-year options to renew.

These renewal options bring the combined estimated potential contract value to around $1 billion, according to Visionstream. The contract comprises three work packages comprising passive fibre network design and construction to bring fibre optic broadband to Melbourne, Brisbane and southern NSW, including Wollongong.

NBN Co Chief Operating Officer, Ralph Steffens said Visionstream will be responsible for the rollout of the passive network from the FAN to the home, making it ready to connect to the network when the occupants order a service from their provider.

Visionstream is also building the first stage of the NBN transit network, which connects communities to the NBN via rings of backbone fibre-optic cables. Leighton’s Managing Director Craig Laslett said: “Visionstream has proven itself as a reliable, expert and capable partner for NBN Co.

”This contract enables Visionstream to continue to grow and create a substantial number of new employment opportunities in the local areas. The contract adds to a number of similar contracts around Australia, means that construction of the NBN is now well underway in all states.

But NBN Co CEO Mike Quigley admitted it was running well behind schedule in some areas. Indeed the whole NBN rollout timetable has become something of a political football recently.

NBN Co has been reasonably open with sharing information about its construction schedule, but changes, the complexity of it all, and high profile examples of falling behind have led to many charges that the whole project is running late and vastly over budget.

A dispassionate reading of NBN Co’s schedule and costings, contained in its Corporate Plan shows this is not the case. But NBN Co is doing as much as it can as early as it can to lock down as many contracts and us much work as it can before September’s Federal Election.

The Coalition, which is currently odds on to win that election, has strongly criticised the NBN as being too costly and too ambitious. Shadow communications minister Malcolm Turnbull has been very vocal in his criticisms, and proposes a FTTN (fibre to the node) network instead of NBN’s FTTH (fibre to the home).

But he has also said that NBN Co will not be dismantled and that an NBN under his government will incorporate whatever has already been constructed. A Coalition NBN will be a hybrid creature, basically FTTN with supplementary FTTH where it already exists, in new developments, and where people are prepared to pay for it.

The big question is the extent to which contracts signed by NBN Co before the election will be honoured. Turnbull says the Coalition will keep to existing contracts, but there are many ways they could be altered. And the current government has already set a significant precedent for breaking major broadband contracts.

When Labor came to power after the Kevin 07 victory it discontinued the billion dollar contract the Howard Government had signed with Opel, and Optus Elder joint venture, to provide wireless broadband across much of rural Australia. It said that Opel had not lived up to its part of the contract, because its network would cover only 72% of rural premises and not the 90% originally agreed.

To what extent would a Coalition Government be able to find fault with NBN Co’s performance to the extent that contracts could be cancelled? In the current climate of hyperbole and mistrust we can’t rule anything out.

Construction contracts with a value of over $3 billion for pulling fibre from FANs to customer premises have been signed with:

  • Visionstream: Southern NSW, Victoria, Queensland, Tasmania
  • Silcar: NSW, Queensland, ACT
  • Transfield: Victoria
  • Syntheo (a Lend Lease/Service Stream joint venture): South Australia, Western Australia, Northern Territory
  • Downer EDI: Northern NSW.

Nothing NBN Co can do with its rollout will be sufficient to assure its critics that it is doing a good job. But it can sign as many construction contracts as possible to ensure that, no matter who is in power after the next Federal Election, it will be committed to completing as much of the network as possible.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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