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• Australian NBN Co clarifies costs and govt contribution

  NBN Co chief executive Mike Quigley is becoming clearer on the costs involved in the rollout of the National Broadband Network (NBN), confirming A$27 billion as a “precise” peak government injection equity figure. However, the former Alcatel-Lucent chief operations officer told Computerworld Australia that NBN Co’s business case was yet to be finalised or delivered to Government.
  Quigley’s new stance, revealed at a recent Australian Computer Society event, comes just a week after he told an Australian Information Industry Association (AIIA) lunch that government equity would be “south of $30 billion”.
  “Our business case requires equity funding by the Government of around $27 billion,” Quigley told the ACS. “This is not the total capital costs, as we expect to raise debt, without Government guarantees, of at least $10 billion.”
  Quigley said that, in addition to government equity and debt funding, internal revenue generation from active parts of the network would also play a part.
  However, given the NBN Co is currently leasing access to its wholesale fibre network at reduced rates, it remains unknown whether its internal revenue is enough to pay back equity, leaving the total cost of the NBN rollout closer to $37 billion than the $43 billion initially proposed.
  Quigley wouldn’t reveal how much less the rollout would cost if its $9 billion deal with Telstra is finalised next year, but said it would be “quite a deal to the overall business case”.
  The $27 billion peak government injection figure is just a billion more than stipulated in the NBN Implementation Study, authored by consultants at KPMG and McKinsey & Company, and released in May. The study found the Government would reach its peak equity injection by 2015, with expectations that NBN Co would be able to repay as much as $20 billion of the injection by 2024.
  Though Quigley appears more comfortable with the new equity injection figure, he told media that the business case was not completely finished, and that it would only be delivered to Government once NBN Co has the opportunity to integrate the Government’s finalised response of the implementation study into the case.
  “We never finish the business case,” he said. “Our business case is constantly updated as we get more information, we just keep tuning it and honing it. As you would expect, if the Telstra deal is consummated, that makes quite a deal to the overall business case.”
  Australian Communications minister Stephen Conroy told a Senate estimates hearing earlier this year that the business case would remain commercial in confidence, and would not be released to the public.

• Australian NBN chief defends awarding of contract

  Australian National Broadband Network (NBN) Co CEO Mike Quigley has defended the company’s decision to sign a multi-million dollar deal with Alcatel-Lucent, despite both Quigley and NBN Co CFO Jean-Pascal Beaufret being former employees of the company.
  Speaking on ABC television over the weekend, Quigley claimed that both he and Beaufret were not involved in the decision to award the telecommunications gear supply contract to Alcatel-Lucent.
  “What I did is before we started talking to vendors, we laid out the types of functionality that we needed and then I stepped back from it,” he said. “Now, it was essential that I stepped back from it, recused myself from it, simply because I had been in the vendor community previously and I had an association with one of the biggest players in fixed line infrastructure in the world so that made good sense.
  “I also was not party to the briefing that the management team gave the board of NBN Co In getting final sign off and approval, I wasn't party to that either.”
  The deal with Alcatel-Lucent, announced last week, saw the company appointed as the initial strategic supplier for the gigabit passive optical network (GPON) and Ethernet aggregation equipment needed for the National Broadband Network (NBN).
  In a press release from NBN Co about the deal, the NBN wholesaler highlighted distance placed between the former Alcatel employees and the telecommunications provider.
  "Mr Brown said that to avoid any perception of conflicts of interest from previous employment both the CEO, Mr Mike Quigley, and the Chief Financial Officer, Mr Jean-Pascal Beaufret, did not participate in the decision by the Executive Committee to select Alcatel-Lucent, or negotiate any price arrangement within this agreement, nor did they participate in the Board approval to select Alcatel-Lucent for any of these contracts," the release reads.
  The deal, worth A$85 million in equipment and services over the next 12 months, will see Alcatel assist NBN Co with engineering and testing activities in the initial deployment of technology for the NBN.
  NBN Co head of corporate services, Kevin Brown, said at the time that the company planned to spend up to $1.5 billion on highly-specialised network equipment during the lifetime of the NBN project.
  Commenting on the recent Heads of Agreement signed with Telstra, Quigley said that having Telstra as NBN Co’s biggest customer would not result in any special favour given to the telco.
  “The relationship with Telstra will be a commercial relationship, it's true it will be one of a large degree of interaction because hopefully we will be selling them services and by services I mean we will carry their traffic on our network and in turn we will be continuing to buy access to ducts, pit, pipes, exchange space, backhaul from them,” he said.
  “So there will be a very close interaction… but in the deal that we signed with Telstra, we made sure we had what I called equivalents, in other words there was nothing that we signed up to that gave any special treatment to Telstra.”
  Quigley also confirmed plans to begin construction on the NBN mainland trial sites next month, with the first services due to go live in the second half of 2011.