NBN build contracts rejigged, without Telstra

The company building Australia's mixed-tech national broadband network has announced another rework to how it allocates contracting work, and to some surprise, the new round of build contracts don't include Telstra.

nbn^TM says its new contracts are performance-based, offering flexible volume commitments, competition between delivery partners and pricing based on outcomes rather than inputs.

Under the previous contracting model, network build partners were allocated large geographical areas to roll out the network. The new management says, however, the contracts lacked performance requirements, nor was there competition with other network build partners.

nbn^TM said in a statement the new work contracts will speed the roll out of the network, which is slated for completion by 2020.

The first of the contracts were signed with Downer, Transfield, Visionstream, Fulton Hogan and WBHO. Work on the contracts is offered by nbn in six month tranches. At the end of each contracted six month period, construction partners must prove they have hit their deliverables in order to continue with further contracts.

If the delivery partners do not hit their targets, the work for which they were previously responsible will become available to other constructors, also on a six monthly basis.

Explaining the absence of Telstra from the contracts, nbn^TM CEO Bill Morrow told the Australian Broadcasting Corporation's AM program the incumbent was originally offered work and was part of the tender program, but subsequently pulled out.

“When we looked at market rates, Telstra felt they did not want to proceed,” Morrow said.

Morrow said the project is on schedule, and has met every objective so far given to it. “This is our second year of hitting targets,” he said.

He also said he is in regular contact with telecommunications minister Malcolm Turnbull, telling the ABC that he speaks to the minister at least every second or third day.

Asked if the current hybrid mix of technologies is adequate to future-proof the network and meet consumer’s increasing desire and need for high download speeds, Morrow commented that he is confident the technology mix chosen has put the network in a positive position.

“The technologies we have chosen have an upgrade path,” he said.

The current contract awards do not include work on the HFC network, which is part of the overall nbn technology mix. Contracts for the HFC network will be announced in the near future, an nbn^TM representative said.

Meanwhile in Brisbane, the communications minister continued fighting the 2013 election, telling an infrastructure conference the project was misconceived, and lacked a “focus on its customers”.

Turnbull conceded that in spite of the shift to a “multi-technology” model, there are still factors that could cause cost blowouts to the network, but maintains that rolling out fibre would have cost “$30 billion more” (pre-election that number was $50 billion but who cares? – Ed).

It was reported that Turnbull also said a customer with a good ADSL connection today might not notice any difference when they're connected to the NBN. However, since the Financial Review National Infrastructure Summit is in Brisbane, Vulture South has not been able to confirm that remark. ®