It has been suggested by the Australian Financial Review the ANZ Banking Group is working with Acacia - now the leading bidder for the National Broadband Network - in a project finance advisory role to help scope out how Acacia could raise debt funding for the project.

They go on to claim, Deutsche Bank is advising on additional funding options including vendor finance from their equipment suppliers Fujitsu, Nokia Siemens Networks and Juniper.

AFR if you are going to report on a subject at least do some research first. Part of the RFP was to provide evidence in their submission of the bidder's financial ability to complete the project. Acacia would not be starting now to secure that funding, in my opinion it was well and truely locked away before the $5m bond was put forward.

Secondly in my opinion few telecommunication equipment vendors would be interested in providing vendor financing due to previous disasters in this area and the global economic crisis adding to the problems of rasing cash. Particularly Fujitsu who recently annouced a projected lost for (Japanese) financial year ending March 2009 of US$272 (A$388) million dollars and cut 1750 jobs in the Philipenes with further cuts planned worldwide.

I wont yet say "I told you so", but it is looking more and more like an Acacia win in the National Broadband Network. Senator Conroy let slip during Senate debate this week with a change of phrasing that it was "Labor's plan to deliver faster broadband to 100% of the population". The only bidder to have made a submission to the government which covers 100% of the population is Acacia.

Luke Coleman has written an article on this http://www.commsday.com/node/322, which reiterates what I said in an article back in November last year - before the tenders where even submitted.

I made the connection to Leightons as the construction firm, Nextgen as the backhaul provider, the ex Telstra executives, the relationship with Israel Chamber of Commerce, the connect with ANZ and Deutsche Bank back in June 2008.

I await confidently from anonymous to collect my bet.

They say a week is a long time in politics; and so too in the Australian telecommunications industry.

On Monday, Don McGauchie confirmed he has formally begun the process of finding a replacement for Sol Trujilo. With the departure last year of Phil Burgers, then recently his right hand man in Greg Wynn, the time has come for the last of the three Amgios to also call it a day. Perhaps with his departure some compromise can be achieved with a new direction for Australia's incumbent telco.

The one thing that will be Trujillo's legacy at Telstra was his almost relentless attack on the Government and ACCC over regulation of the telecommunications industry and the company he lead in particular.

Tuesday saw Optus mention it would consider an alliance with the two other national biggers to build the federal government's national broadband network. However the group may have to wait for some time because of the constraints under the RFP guidelines. A joint venture between the three parties would deliver the best outcome for Australia. Axia could build their proposed backhaul network, Optus offer the access network (which they already have a good coverage with the ULL, HFC, Mobile and Satellite and Acacia the network operator delivering truely Open Access to the market.

Wednesday saw our Communications Minister reiterate that is was the Government's "ambition" to sign a contract by the end of March, after a prolonged attack be Senator Minchin in which he repeatedly questioned Minister Conroy when the Federal Government would be ready to sign a contract with a successful tenderer.

It has previously been reported in many circles - including on this blog - that Optus, Axia and Acacia may seek regulatory guarantees before signing a contract with the Government. Considering the upper house is still controlled by the opposition parties who so far have been vehemently opposed to the National Broadband Network, I don't think anyone will be signing a $10b contract based on promises which the Government cannot guarantee will be passed.

On Thursday, Senator Nick Minchin - Shadow communications minister - introduced a motion which would require the government to immediately furnish the Expert Group's report to the Senate. After a compromise was reached with Family First Senator Stephen Fielding, the motion was passed requiring the report to instead be published the day after the NBN tender is awarded.

Minchin said Conroy had failed to deliver on claims that the NBN process would be open and transparent. In a statement Minchin said, “While I maintain this advice should be publicly released before a successful tenderer is chosen, the Senate has agreed that at the very least they should be tabled immediately after a winning bid is announced”, further adding “Public scrutiny of this crucial advice to the government will enable a proper assessment of whether Labor is acting truly in the national interest and not purely in its short-term political interest.”

It seems I am not the only one thinking Acacia has a real opportunity at winning the contract to build and operate the National Broadband Network.

Paul Budde, one of Australia's eminent telecom analysts had this to say about Acacia:

"The man behind Acacia is most probably Australia’s foremost national infrastructure expert. Doug Campbell was the man and the brains behind the early successes of Telstra Country Wide (TCW), before he and that organisation was sidelined by Sol Trujillo. Under his leadership Telstra had an opportunity to follow a more cooperative path towards a network sharing model; however his quiet diplomacy on that issue was bulldozed by Trujillo. And I can guess who some of the hundred people are that have been working with him on this project. Several of them will also go back to those successful early TCW days."

You can read Paul's full article here

Well Telstra, you certainly have a strong challenger with Acacia. Perhaps your $5billion proposal isn't looking so good anymore.

In a three part interview Business Spectator's KGB team of Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz discuss with the the three leading bidders about their proposals.

The first interview with Telstra chairman Donald McGauchie has him explaining:

• The reason the telco put in a proposal, rather than a bid, saying unless it knows what the rules are, it cannot produce a bid that makes sense


• He rejects the Terria bid, saying it cannot be described as such without concrete sources of funding and compares their situation to the 'glory days of Babcock & Brown


• He launches a savage attack on the credentials of the Optus consortium's chairman Michael Egan


• He rejects any suggestion of a single desk for telecommunications


• Under Telstra's proposal, the lowest point at which people can get access is $29.95 retail price, with a one megabit capacity

The second interview with Terria chairman Michael Egan, former New South Wales treasurer:

• The national broadband network (NBN) must be for the good of the country and not Telstra's bottom line, describing Telstra's targeted rate of return as 'exorbitant'.


• Terria will not divulge the commercial arrangements of the bid, but it is confident that the funding is 'robust' and will be very attractive to the government


• The consortium is basing its rates of return on infrastructure, in a similar model to utilities

The third interview with Acacia chairman, and former Telstra Countrywide boss, Doug Campbell:

• There are about a dozen or so former Telstra employees involved in Acacia


• On the involvement of Solomon Lew and Doug Shears, Campbell says they paid more than the bid bond, adding that they put money up to allow the team to come together to put this bid on the table


• There's a risk, should Optus win the bidding process, that there will be a conflict between its retail and wholesale activities


• While fibre-to-the-node forms the bulk of Acacia's bid, some of its services would be fibre-to-the-premise, right to the homes or businesses where the fibre does exist


• Acacia is proposing to cover 100 per cent of the population

It is interesting that Acacia is now very much in the picture with the NBN. Two weeks ago the media and some telcos such as AAPT CEO Paul Broad, was suggesting it was a two horse race between Telstra and Terria and few gave any credence to the other players. I was the only one suggesting Acacia would be a strong contender.

I am sure many of you have already seen the news that the NBN bids are all in.

As I predicted in my last post there were four national bidders in Telstra, Optus Axia, and Acacia. On top of this there is also the state bids from the Aurora Energy/Tasmanian Government (TAS) and TransACT (ACT). The only bit I got wrong was TERRiA did not bid - perhaps not a surprise considering the loss of support from AAPT, Soul/TPG, TransACT and Powertel.

Two weeks ago I posted an article were I said my money was on Acacia to win the NBN. Someone posted a comment that I was likely to lose my money (or my job) over this, but I think given the situation many factors have changed.

Firstly Telstra have failed to submit a conforming bid and despite Senator Conroy's protests, tender guidelines require conforming bids are assessed first and if one bid meets the requirements, that must be taken over any non conforming bid. Telstra's bid may very well never be considering unless the government wants to break its own rules - and potentially end up in court.

TERRiA failed to submit a bid instead, falling in being Optus Network Infrastructure (a Singtel/Optus company formed just for the NBN) and supporting their proposal and business model. Terria revealed details of its proposal last week. It costed the network at about $15 billion and said this would buy 75,224 nodes, two satellites, 1360 new wireless base stations and 100,000km of fibre.

Acacia however has finally shown its hand and has bid a truely open access network with a mix of technology including FTTH, FTTN and Wireless - exactly the approach I have been espousing for the past 8 months. They have a clear separation between the operator of the infrastructure and the many retailers of services that run over that infrastructure - the key to open access which Telstra is refusing to consider with their objection to structural seperation. They have also pledged a fair return for owners of existing assets for use of their facilities, so they are happy to co-exist with existing networks.

So we now sit tight over Christmas for the "expert panel" to evaluate the bids within 6 weeks, which makes it the 7th of January for a decision date. Looks like the expert panel and their team of technical, commerical and legal advisors are not having Christmas this year.

Media Release. 26 November 2008.

Acacia Australia's Bid Chairman and founder of Telstra Countrywide, Doug Campbell today announced that Acacia Australia had lodged a submission to build and operate the National Broadband Network (NBN).

"The Acacia NBN will deliver broadband as a utility infrastructure to all Australians, following the same models used in the gas and electricity markets," according to Mr Campbell.

"Like gas and electricity, there will be a clear separation between the operator of the core infrastructure and the many retailers of services that run over that infrastructure.

"The Acacia model will provide all Australians with access to faster, cheaper broadband and a greater choice of services.

"Acacia has been developed to service national interest. There is no existing carrier in the team, and this allows Acacia to take a clean sheet approach to the NBN."

Features of the Acacia NBN include:

* Speeds of 12Mbps to 100% of Australia not 98% - at an affordable cost.

* An exclusively wholesale model - Acacia will not retail services.

* A technology mix, including fibre-to-the-home, fibre-to-the-node, wireless and satellite.

* A project team with deep expertise in all relevant aspects of telecommunication network design, construction and operation.

* A commercial return on the government's contribution.

* Supported by some of the world's leading technology companies including Fujitsu, Nokia- Siemens Networks and Juniper.

* Wholesale rather than retail returns to investors.

* A fair return for Telstra and other asset owners for use of their facilities.

Mr Campbell said the Acacia wholesale utility style model is emerging around the world as the preferred model for 21st Century broadband.

"The model is simple and effective and doesn't require the returns that a traditional telecommunications retailer expects," he said.

"Under our model the driver is affordable universal access to high quality broadband services for all Australians.

"We will let retailers fight for market share while we focus on building and operating a sophisticated, affordable broadband network.

"Under our model there are many winners. Australians win by having access to internationally competitive broadband, telecommunications retailers win by having access to affordable wholesale services and existing asset owners win because they get a fair return for use of their infrastructure. Everyone in the market benefits from having access to a larger broadband pie."

Mr Campbell said Acacia Australia's business model has attracted significant interest from financiers and infrastructure investors, and is committed to broad-based majority Australian ownership.

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.

The question on everyone's lips at the moment: Who is Acacia?

They are a dark horse which joined the group of bidders for the National Broadband Network at the last moment with their lodgement of the $5m bond.

Acacia Australia Pty Ltd is a $3m company made up of prominent Melbourne business people which include former Telstra excutives Doug Campbell and Lawrence Paratz; ICM Australia and former Berri investor Doug Shears; Chairman of Australia Israel Chamber of Commerce Leon Kempler; director of Adsteam, Leighton Holdings, Macquarie Infrastrucuture and Virgin Blue, David Mortimer; Vice Chairman of ANZ Deutsche Bank, director of the ABC, Chairman of Film Australia, and director of Deutsche Australia Mr Steve Skala; and former Coles Myer director Solomon Lew.

The company has been very quite with a single statement which says that their bid will alleviate government concerns by making the NBN open and competitive. The key factor residing in Acacia's proposal apparently suggests the network will ultimately be returned to public control similar to the CityLink project after 25 of years.

At this stage Acacia are planning a bid which will only cover the state of Victoria.

Despite the impressive firepower, it remains unclear which telco talent Acacia has secured for its tilt. There are certainly experienced telco people in Campbell and Paratz, but like Macquarie Bank, they may soon be on the prowl for an experienced telco who can deliver the required operational and business support services.