NBN critic Concept Economics goes bust

Concept Economics, the consultancy that recently estimated the costs of the National Broadband Network outweighed the benefits by up to $20 billion, has gone into administration.

The Australian Securities and Investments Commision's listing for Concept Economics reveals that on 3 September it was put under external administration. The day prior to it entering into administration, Concept Economics had released a new cost-benefit analysis of the $43 billion National Broadband Network, which argued that the costs outweighed the benefits by between $14 billion to $20 billion.

News outlet Crikey today reported that Sydney-based insolvency specialists Jones Partners was managing Concept Economics, which it said had been caught out by several offshore clients refusing to pay their bills.

Concept's chairman, Henry Ergas' alternative to the $43 billion NBN proposal would be to upgrade existing Hybrid Coaxial Fibre (HFC) assets, along with an upgrade to copper and wireless networks.

Minister for Communications Stephen Conroy has resisted persistent challenges from shadow Communications Minister Nick Minchin to subject the $43 billion NBN proposal to a cost-benefit analysis. Finance analysts have also called for such a study. Earlier this week a BBY analyst called for a study into the cost of the project and warned that until one was conducted, it would fail to attract private sector investment.

The likely cost of the project — estimates have ranged between $28 billion to $43 billion — will remain unknown until the NBN implementation study, currently being undertaken by McKinsey and KMPG, is complete. A report is not due until February 2010. The most significant factor expected to influence its cost was whether Telstra will be willing to sell its access network of ducts and poles to the new NBN Co.

Telecommunications industry publication CommsDay had earlier this year asked Concept Economics to come up with a likely cost consumers would face if the project were to be viable. Ergas came up with $215 per month based on 80 per cent of the 7 million broadband connections in Australia taking up services on the new network.

Henry Ergas, had been asked by Opposition Leader Malcolm Turnbull to devise a rebuttal to Labor's own tax review penned by Treasury boss, Ken Henry.