NBN spending over AU$60K a day on external lawyers

The company responsible for rolling out the National Broadband Network (NBN) across Australia is spending upwards of five times the legal fees incurred by other agencies that fall under the Department of Communications, including the department itself.

In response to Senate Estimates Questions on Notice, NBN revealed that between September 14, 2015, and January 31, 2016, it spent a total of AU$8,694,204 in external legal costs.

"NBN has a competitive panel arrangement in place, which was fully re-tendered in mid-2014. However, NBN does from time to time go off-panel for specialist advice where necessary," the company said in reply to Labor Senator Joe Ludwig.

NBN would not break the cost down further, stating that to do so would breach confidentiality obligations, and would be an unreasonable diversion of resources.

Over the 139-day period covered by the question, NBN's total spend breaks down to AU$62,500 per day, including working all weekends and Christmas holidays.

Across the same period, the Department of Communications spent AU$1.57 million on legal expenses, while the ABC spent AU$1.6 million in comparison. The national broadcaster broke down its expenses, saying AU$1 million was spent on solicitors, with half that amount spent on barristers.

In other questions, NBN confirmed that it has a contract with Tata Consultancy Services for IT services, but cited commercial-in-confidence as the reason for not stating how many staff members it used from Tata.

NBN said that it expects its IT workforce to be reduced once operational maturity is reached with the so-called multi-technology mix (MTM).

"The IT organisation has grown over the past 24 months due to two key drivers: 1, to manage the increase in active customers on our networks and associated systems; and 2, to support further efficiencies in fibre-to-the-premises (FttP) and fixed-wireless and to deliver capability associated with the launch of our long-term satellite, fibre-to-the-node, and hybrid fibre-coaxial products," it said.

A mixture of commercial-in-confidence and ongoing design considerations were used by NBN to avoid stating the cost of aerial and underground lead-ins.

On Tuesday, NBN announced a new discounted CVC wholesale pricing structure that uses a series of industry-wide tiers, rather than being calculated separately for each retail service provider.

The new pricing structure, to be implemented for two years starting on June 1, will be calculated as an average of CVC dimensioning per end user across all customers on the NBN, with the changes effected after feedback from RSPs.

However, the changes were roundly criticised by industry.

"As it stands, the CVC charging regime may be one of the biggest obstacles to the NBN delivering on what it was intended to deliver ... this is because of the Netflix effect, crudely," Optus vice president of Corporate and Regulatory Affairs David Epstein said.

"The problem with industry averaging is that it's a potentially incrementalist approach that rewards the lowest common denominator. It does not reward RSPs who want to exercise initiative or want to innovate by creating new, better-provisioned service offers that compete on quality of experience."