TECHNOLOGY SPECTATOR: NBN Co's moment of truth

It's going to be a make or break year ahead for NBN Co as it tackles one of the biggest infrastructure projects in the nation's history.

Technology Spectator

With the National Broadband Network four years old and the rollout firmly underway, 2013 is going to be the year NBN Co, the company charged with building the project, proves whether it’s up to the challenge of building one of Australia’s biggest infrastructure projects.

Some of the challenges on NBN Co's plate in the New Year include regulatory approvals, overcoming design difficulties and meeting a demanding installation deadline – all of this with the distraction of a federal election campaign that promises to be a bitter and vindictive affair.

There’s no denying the fact that the NBN’s progress so far has been slow to date and along the way NBN Co has had to deal with design difficulties, poor mapping data and excruciatingly slow access negotiations with Telstra. In fact, negotiations with the ACCC over the Special Access Undertaking continue to drag on and are expected to be settled midway through next year.

Race against time?

While the regulatory issues drag on, there remains the civil engineering challenge of getting fibre in the ground. NBN Co’s amended 2012 business plan puts the project six months behind the projections that were made just two years earlier, with just over half the original 1.2 million premises expected to be passed by July 2013. As at the end of September a third of the revised target of 660,000 for this financial year has been met, leaving 440,000 premises to be passed over the nine months to July 2013.

That’s a lot of premises but as NBN Co’s contractors – Silcar and Service Stream – confidently pointed out at the recent NBN Realised conference, it can be done and similar targets were met during pay TV rollouts in the 90s. Key to meeting construction targets will be delivering working designs to the contractors and so far NBN Co has lagged behind on this front, blaming the quality of data given to them by various providers.

NBN Co high command is confident that the design problems have been sufficiently overcome and with the plans now rolling out, keeping these designs flowing is going to be critical in 2013.

MDUs and uptake

While designing and rolling out the fibre are two challenges, connecting the customers remains of paramount concern. Also behind schedule is the contracts for the Multi Dwelling Unit connections – connecting apartment blocks, industrial complexes and office towers to the fibre network.

NBN Co’s request for proposals for the MDUs closed in June 2011 and the delay in awarding contracts is going to hurt the take up rates for the project as people within office parks and unit blocks will simply not be able to connect. Failure to address this contractual delay is going to affect the project’s work flow and consequently construction costs as contractors will have to return later to complete works that pass apartment blocks and industrial parks.

Access to buildings is also going to be a challenge as negotiating with individual building owners will be cumbersome. However, building managers and landlords intent on disruption may want to note that both Mike Quigley and communications minister Stephen Conroy made it clear at the release of the 2012 business plan that "frustrated premises” will be on their own when the old copper telephone network is removed 18 months after NBN connections go live.

Hardline on towers

This hardline attitude has also been shown towards communities resisting wireless towers as the Golden Plains Shire in Central Victoria found out. After rejecting NBN Co’s plans to build a tower in the shire Quigley warned that the district was potentially at risk of missing out on having wireless services altogether.

In reply the then Golden Plains Shire mayor, Cr Geraldine Frantz, rejected the idea that the local council was being obstructionist, instead blaming the company for not consulting with the community on the tower’s location.

"NBN Co’s claims that they have taken the time to adequately engage with the community and that it cannot proceed with the Napoleons fixed wireless facility are simply not correct,” Frantz said in a statement.

It’s an incendiary issue and there is ample potential for things blowing up in NBN Co’s face, mainly because hard luck stories from the bush during an election year won’t be appreciated by the Gillard government. So community consultation on the wireless towers and other key infrastructure is going to become critical in 2013.

Who gets fibre or wireless is going to be an issue as well, with many communities earmarked to have wireless connections campaigning to have the faster and more reliable fibre service. Outback Queensland’s McKinlay Shire Council is an early agitator for fibre connections as they lobby to connect the town of Julia Creek.

We can expect more remote communities in 2013 to be asking for the faster services and NBN Co will have to find a mechanism to negotiate cost agreements with state and local governments to provide this option to districts that fall outside the company’s criteria for providing fibre connections.

Getting connections to outback towns is one of the many issues both the minister and NBN Co will have to consider in the noisy and distracting run up to the 2013 election. With the unfortunate politicisation of the project, there will be countless management distractions with various real and confected issues and cheap point scoring during the campaign.

Life after the election

Should the Labor party lose the election there will be major changes to the NBN as an Abbott government attempts to reduce the scope of the project and install a new executive regime at NBN Co.

Chris Coughlan of communications consultancy firm Telsyte says, "Any significant change in policy, such as the use of Fibre to the Node would result in up to a four year delay due to review processes, revised legislation drafting and implementation, and renegotiation of the Telstra and Optus NBN contracts.”

A four year delay to a project that is already running late would be a blow to many Australian businesses and communities. So there is a lot at stake here and NBN Co needs to clearly demonstrate that it can deliver the project on time and within budget.

A Labor victory brings its own complexities. If the Gillard government is able to orchestrate a win – and it could happen – expenditure is going to come under pressure as mining revenues expected in last year’s budget fail to materialise. The NBN is going to be one of many areas that will come under federal budget pressures.

At a state level, the attempt by the NSW Government to overcharge for electricity pole access is an early harbinger of many more attempts by state and local governments to wring much needed revenue out of NBN Co.

Even without the distractions of various governments, 2013 is going to be the year that the NBN starts to deliver on its promises. For the management of NBN Co, their reputations will be built or lost depending on whether the project meets its targets.

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