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NBN Survey: Using a public/private company the right move

NBN Survey: Using a public/private company the right move

Establishment of NBNco is the right way to go, but concerns are raised

The establishment of NBNco to rollout the Federal Government’s planned National Broadband Network (NBN) is the right move according to six of Australia’s leading ICT analysts.

Ovum principal consultant, Leith Campbell, claimed there was “no better viable alternative”.

“Governments don't do infrastructure projects on their own these days; and the alternative of tossing money at Telstra would have a chilling effect on competition,” he said.

Campbell’s sentiment that an infrastructure project of the size of the NBN needed government funding and support was shared by several of the other analysts with IDC telecommunications program manager, David Cannon, adding “at this stage there is no better alternative other than a ‘willing’ structural separation of Telstra”.

NBNco was created as a joint public and private entity to oversee the rollout of the NBN when the government abandoned its original tender for a fibre-to-the-node network in favour of its current plan of a fibre-to-the-premises network.

The analysts’ responses come as part of an ARN survey covering five areas – the economic and social benefits against cost; alternatives to a fibre-to-the-premises (FttP) network; status of existing networks; the NBNco arrangements; and the public discourse on the NBN. The analysts agreed FttP was the best choice.

(The analysts’ responses have been detailed in a series of articles. See yesterday’s article on whether the network needs to be upgraded from a technology and competition viewpoint.)

Despite the general support for the public/private plan as embodied by NBNco – which is headed up by former Alcatel COO and president, Mike Quigley – there were some concerns raised. In his response, Frost & Sullivan ICT practice senior research manager, Phil Harpur, said while the government was essential in getting the ball rolling, “ultimately private sector investment will be key to raising the remainder necessary funds in the long term”.

Market Clarity CEO, Shara Evans said as long as NBNCo maintained its neutrality from the retail market, it offered a workable structure.

“My concern, however, is the practicality of attracting private funding – especially in a global economic crisis,” she said. “I expect that the commercial requirements for a [relatively] fast return on investment will make it very challenging to attract investors. Consideration should therefore be given to complete government funding of the NBN. This concept, however, opens another can of worms: After all it wasn't that long ago that government sold down its share of Telstra!”

A seventh analyst, Gartner enterprise communications applications research vice-president, Geoff Johnson, declined to say whether he agreed or not with the Government’s plan of using a public/private company to rollout the NBN.

He did, however, say the government’s “plan to privatise after 5 years operation is sound”.


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