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Oz network hits serious speed bump

Supplier prices too high, negotiations halted

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While the political battles have occupied centre-stage, Australia’s National Broadband Network has hit its first real-world speed-bump, with reports in Australia that it has halted negotiations over key civil works tenders.

The Sydney Morning Herald on Friday reported that negotiations for construction tenders were halted because all the offers on the table were too expensive.

Speaking to ABC Radio on Friday morning, NBN Co’s Kevin Brown said that the company’s price expectations were based on “extensive benchmarking”, and that “every bid was above what we were expecting”.

In five months of negotiation, NBN Co has narrowed an initial 14 bidders down to five. “I wouldn’t describe it as price gouging,” Brown told the ABC, “but we were not getting fair value for money.”

Construction companies are believed to have cited Australia’s mining boom as causing wage pressures for personnel able to undertake the civil works.

Brown told the ABC the company has a “plan B” it is considering today, but would not elaborate on NBN Co’s options.

The shadow minister for communications and broadband Malcolm Turnbull seized on the NBN Co decision, saying the government is “now confronting the reality of the costs”.

“This … appears to be well above even their high end cost estimates,” he said. “The government is making an enormously expensive rod for its own back.” ®

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