Australian government edges closer to comms network sale

The Australian government has appointed two advisory and legal firms to take the lead on the scoping study for the sale of the Intra Government Communications Network (ICON).

In the mid-year Budget update in December, Treasurer Joe Hockey set aside funding for the scoping study to look into the optimal method and timing of a sale of the network.

Finance Minister Mathias Cormann confirmed on Tuesday that KPMG was appointed as business adviser, and King & Wood Mallesons has been appointed as legal adviser for the scoping study, which will lead to the likely sale of the network.

ICON connects 97 government agencies in Canberra, and is made up of 160,000 kilometres of fibre in the network, with 516 points of presence, 3,931 links, and 2,040 pits. The government spends approximately AU$5 million per year on new connections to the network, and AU$3 million in annual uptake.

Australian government chief technology officer John Sheridan explained in February Senate Estimates hearings what the network is used for: "For secure communications. It is physically rated and protected, and agencies can use that to connect rather than use commercially provided cables. It is about a tenth of the cost of commercial cable," he said.

"These are actually what we call dark fibre. We just provide the link. They then run over whatever communications they want to. It might be connecting two datacentres. It might be connecting their own networks internally. We are just providing the fibre for them," he said.

It is run by the Department of Finance, with around 30 staff members working on ICON. The departments pay for the new connections, and a fee based on how many connections they have.

Cormann told Estimates that the scoping study would determine how the government can have "the most secure network possible at the best value for money in the most efficient, effective way". He said that the government had no predetermined ideas on the privatisation of the network.

"What we are saying is that the scoping study needs to go in and look at what the current set-up is, and how the current set-up could be improved. We have said, 'Look at all of these various areas, including management, operations, the ownership structure, and make a recommendation to us on what you think is the best way forward'," he said.

Cormann said the government will consider the results of the scoping study in the first half of this year, but has not indicated when it will make a decision on the likely sale of the network.