Having avoided publishing too much on the NBN in recent months - because most of the reporting is purely speculation as the bidders are all under gag orders - it is time to summarise the recent events that have taken place.

Perhaps the biggest news is the former G9 now called TERRiA has started to crumble as one by one the original group of nine Australian Telcos has dropped to only five. AAPT merged with Powertel last year, reducing the group to eight, and they were the first of the telcos to drop out last month. Soul was taken over by TPG who decided it was all too hard to manage their own backyard let alone be part of a team. TransACT was the fine partner to withdraw, but they were already submitting a separate bid for Canberra only. So that leaves Optus, Internode, iiNet, Primus, and Macquarie telecom to hold up the team.

Paul Broad, the CEO of AAPT, wrote an article recently for The Australian where he claimed "We're weeks away from the government commencing its selection process to award Terria or Telstra". A little bit presumptuous there Paul, considering there are at least another four bidders that I am aware of also in this; one of which I think will put forward a more compelling solution than either TERRiA or Telstra.

Shadow Communications Minister, Senator Minchin has been on the front foot over the past weeks attacking the Government over its handling of the NBN and the value it will bring to Australia. In response to Telstra's submission to a Senate hearing into the project that operationally it simply could not build or maintain a world-class NBN with further separation, the Senator said "Telstra's evidence was a damning indictment of Labor's fatally-flawed NBN tender process and highlighted just how unrealistic many of its key objectives are".

Speaking at the Broadband World conference in Sydney last week, Centre for International Economics (CIE) director, Kerry Barwise, said a key dynamic for ensuring competition is the rate of return sought by the National Broadband Network (NBN) builder. His analysis into the NBN showed a market and regulatory structure that permitted the exercise of market power through vertical integration and if permitted would allow the operator to obtain a relatively high rate of return on equity which in turn would lead to a loss of GDP of around 0.35 per cent per annum. In other words if Telstra wins the NBN, we are going to be heading backwards - no news there. “So with 0.35% what happens is, every five years the community will pay again for this asset," he said. "The community would pay the first time and then every five years they would have pay again through high prices.”

Finially my own views on the NBN. As it stands today, I would be placing my money on Acacia as the most likely winner. They are a dark horse and have not said much about what they are doing - perhaps because they are just getting on with the job. Just look at the team:

* Two ex-Telstra senior executives - gives them the telco experience required to make a competitive bid
* A director of a major international bank - a source of debit funding
* One of Australia's richest men - a source of equity funding
* Connections to Israel and the Jewish community - another source of equity funding
* A director from Leighton Holdings - a construction team to build the network, but also owns Australia's second largest fibre network providing a existing operating vehicle and much needed backhaul capability
* A director from Macquarie Infrastructure Group - another source of debit/equity funding significantly involved in big infrastructure projects and as the government has said this is the largest in recent history.
* Directors or former directors from various big companies such as SEEK, Berri, and Uncle Tobys

With this amount of business smarts I am sure they are not in this to come anywhere but first.


At 19 November, 2008 11:22 Anonymous said...

"I would be placing my money on Acacia".

You'd would be set to lose your money or your job then, Stephen.

Have a look at the the Acacia Regulatory sibmission:

"Accordingly, the NBN provider will need some kind of equivalent treatment to safeguard achievement of the NBN...."

"One approach would be, rather than issuing “special licences” for an NBN, to impose certain licence conditions on all carriers (other than the NBN provider)...."

"the Government could amend the Telecommunications Act to specifically prohibit all carriers(except the NBN provider) from rolling-out certain infrastructure.......“a person other than the [Australian Telecommunications] Commission: (a) shall not erect, maintain or operate a telecommunications installation within Australia; or (b) attach a line, equipment or apparatus to a telecommunications system”.."


At 26 November, 2008 21:31 Stephen Davies said...

Now the bids are in do you want to rethink your statements here. I think my money is looking good.

Telstra has made a non conforming bid. Terria didnt bid (but Optus does) and Acacia bids a truely open access with a mix of technology including FTTH, FTTN and Wireless - exactly the approach I said should be taken with the network.

They also have a clear separation between the operator of the core infrastructure and the many retailers of services that run over that infrastructure - the key to open access which Telstra is refusing to deliver.

At 18 December, 2008 05:59 Anonymous said...

I think Stephen's bet is looking even stronger with Telstra kicked out


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