NBN business case 'reasonable': Caliburn

NBN business case 'reasonable': Caliburn

Summary: Corporate advisory firm Greenhill Caliburn has delivered a positive appraisal of NBN Co's business case in a report published this morning by the Federal Government, with the firm labelling the broadband company's assumptions of its future operations as "reasonable".

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Corporate advisory firm Greenhill Caliburn has delivered a positive appraisal of NBN Co's business case in a report published this morning by the Federal Government, with the firm labelling the broadband company's assumptions of its future operations as "reasonable".

Following the delivery of NBN Co's corporate plan last year, the government had asked Greenhill Caliburn to review NBN Co's Corporate Plan and provide a commercial assessment that would identify and analyse its key assumptions and potential risks.

The plan covers a wide range of matters from projected pricing, to how much NBN Co will charge retail service providers to provide broadband services over its network, how much government capital it will require ($27.5 billion), when it will seek additional investment from the private sector (2015) and the network construction schedule for the fibre, wireless and satellite roll-outs that will constitute the NBN.

In a nine-page executive summary of its report published this morning by Communications Minister Stephen Conroy online, the advisory firm appeared to be cautiously positive about NBN Co's plan.

"Greenhill Caliburn has reviewed the corporate plan and relevant supporting documentation provided to us," the firm wrote. "Based upon our review, we believe that the corporate plan has been completed to high professional standards, providing the level of detail and analytical framework that would be expected from a large listed public entity evaluating an investment opportunity of scale."

"Based on our preliminary review, as more fully described in our report, and subject to the assumptions contained in the corporate plan itself, Greenhill Caliburn believes that, taken as a whole, the corporate plan for the development of the NBN is reasonable," it added.

Conroy immediately hailed the advisory firm's approval as vindicating NBN Co's plan; noting that it confirmed NBN Co's key assumptions. And the minister appeared to highlight his government's commitment to transparency as demonstrated by the report. "We've released the Corporate Plan and now we're releasing the Executive Summary of Greenhill Caliburn's independent assessment of NBN Co's work," he said, "mindful that the complete document deals with sensitive, commercial-in-confidence material."

Greenhill Caliburn's document did, however, contain a number of caveats about the NBN project. For example, it pointed out that the NBN's successful implementation and financial forecast were subject to a number of "risks, contingencies and external factors", such as shifting technologies and consumer preferences, and that there was a lack of "directly comparable precedents globally for the NBN".

And the ever-present wireless debate also raised its head in Greenhill Caliburn's report.

"Trends towards 'mobile-centric' broadband networks could also have significant long-term implications for NBN Co's fibre offerings, to the extent that some consumers may be willing to sacrifice higher speed fibre transmissions for the convenience of mobile platforms," the firm wrote. "The prevalence of such [wireless-only] homes should be carefully monitored in connection with ongoing performance management efforts."

In addition, Greenhill Caliburn also had concerns around the pricing of future products based on the NBN, noting that consumers might push back against a usage-based pricing model, that lower prices might need to be set initially to encourage higher take-up rates, and that retail service provider margins on entry-level NBN services might combine with lower-than-expected growth in premium services such as internet delivered television.

To address these and other risks, the firm recommended close monitoring of the project as a whole, especially the migration period where Telstra customers will be shifted onto the NBN, and an ongoing review policy which would see annual, quarterly and "event-based" ad-hoc reporting established to the government, and an "investment committee" established within the government to keep an eye on things.

"As with any infrastructure project, there are always risks, contingencies and external factors, and the government will work closely with NBN Co to put in place agreed performance indicators to track its performance and adjust strategies or operations as needed," said Conroy.

Topics: Government, Broadband, Government AU, NBN

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19 comments
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  • Great,

    I wonder how much this "independent" consultant got for this rubbish.

    Typical government, get them in, tell them what you want them to write, they write it and you have your supposed facts.

    When this turns into a cluster (well it's a complete cluster at the moment anyway), just remember this "independent" consultants name is.

    He probable won't even care, made his money and now is gone.

    Only to laugh myself silly with the "dreamers" and "futurist" thinking NBN will save their world. Higher prices - a fact. Wireless growing - a fact. 7% return very, very average - a fact. Will it save the human race - very unlikely.

    The idea that NBN will enable "futurist" to be "medically" examined and operated on at home is a joke. Almost as good as getting a diagnosis via e-mail, no good doctor would do so.

    Places that need fibre already have it, and will pay for it. As for homes have 100Mbps to transmit 2kbytes on blood pressure or weight, is a joke.

    But wait, there's more! GDP to increase from it and for it to stimulate our economy. Sorry, proven all monopolies do not create the best economic outcome. GDP will increase with NBN increase prices to get out of debt which will inturn lead to higher prices, and more money for the government.

    But there's more! They may even sell it later down the track to some suckers again, who think it would be a great investment. Looking forward to these "dreamers" putting their money where their mouth is. Both in investment in NBN, and buying these "over priced" services.

    Reminds me of that movie "The castle" when looking at the trading post........... "dreaming".......................
    Theguy-bbb4a
  • Gee that was quick...

    Yet another positive NBN article was just published and quicker than you can say, monkey boy, a FUDster jumps in and for no rational reason start firing up... LOL...!!!
    RS-ef540
  • "Places that need fibre already have it, and will pay for it." - Theguy, 2011

    *** wind back a few decades ***

    "I think there is a world market for maybe five computers." - Thomas Watson, chairman of IBM, 1943.
    Nimos-92373
  • Theguy, I thank you for your point of view which is excellent for consideration.

    I notice the No Freedom of Expression Thought Police (RS) was very quick to disparage. As Adolf said "burn the books". That last reference had no reflection on you RS simply an historical fact.
    sydneyla
  • Sydneyla,

    I thought that being African born I had a thick skin. This guy (RS) seems a salt water crock. Ignore it, it will go away.

    By the way, have you read the latest.

    Cheers
    Vasso Massonic
  • Could be two reasons RS. Perhaps I am a silly masochist who enjoys the pain. Or perhaps I enjoy the mental joust with your good self.
    sydneyla
  • Sorry Syd,

    http://www.theaustralian.com.au/australian-it/government/wireless-takeup-threatens-nbn-report/story-fn4htb9o-1226005789874
    Vasso Massonic
  • Well I am the one jousting which makes you ?

    Begins with m? Ends with ental?
    RS-ef540
  • the NBN confirmed "dangers of mobile wireless".
    "Trends towards 'mobile-centric' broadband networks have significant implications for NBN Co's fibre offerings, some consumers may sacrifice higher-speed fibre transmissions for the convenience of mobile platforms !"
    'The report said NBN Co should monitor the prevalence of homes with wireless-only connections, to "actively manage" this'..
    Its back to poles and heavy shielded cables down the street to the local control unit - the NBN SNA 3270 rollout.
    For our own good, dont want no Tunisa's or Egypts here!
    Havohej Havohej Havohej
  • Well how about that ! And we all know who Greenhill Caliburn are don't we. Such a well renowned authority on all things NBN, with a World Wide track record of positive predictions and reliable information from way back. (Who are they again ?)
    Wallingford-314a6
  • Sydney you should be ashamed of yourself for mentally jousting, with a mentally deficient jouster ! Shame on you !
    Wallingford-314a6
  • Not what one would call an awe inspiring conclusion (IMHO)
    Wallingford-314a6
  • A government funded study that says it is cautiously reasonable and includes a whole bunch of caveats... that's like a study funded by the Tobacco lobby that says smoking is safe, just make sure you have a filter on the cigarette and don't inhale.

    It's only the Conroy Office Muppet (you know who you are) and the other dolts here that seem to be blind to the market growth of wireless and the stupidity of NBN Fibre to 10,000,000 Homes when there is NO IDENTIFIED NEED.

    I have asked before, I'll ask again... where is the killer app?... the raison d'être for RESIDENTIAL NBN FTTH?

    It will be silence, except for the old chestnuts of NON-residential needs that the Cowboy goes on about.... video for Medical purposes, 'business use', education.... little to do with home use which can't be handled by existing technologies of 3G+ wireless and ADSL2+ for the foreseeable future.

    Oh, the Muppet did rabbit-on once about 3D Holography, lol, yeah sure, as useful as an ashtray on your electric wheelchair.

    I said 6 months ago Wireless 3G will sink NBN FTTH.... this study makes it very hard for the Cowboy to hide but gives him and NBN Co reason (an opportunity?) to quietly slink away from FTTH... and with the delay in NBN Co getting any real product to market, the increasing ascendancy of wireless with 4G about to hit, plus soon to be three hostile state governments... oh and some pretty crappy results in the primary vote polls for Gillard... Conroy and the grossly expensive, increasingly unpopular NBN are a liability Labor doesn't need.
    FiberLover
  • Oh Vasmas, refer below and you will (if you can stop thinking about those more precious than life itself TLS shares of yours for more than 1 second and stop posting silly URLs exclusively from the Australian, sigh) be reminded who actually, through unwarranted disrespectfulness, first awoke the croc...!

    You’d think someone from Africa would know… if you awaken a croc, you must expect to be (as you have and will continue to be vasmas) at very least bitten, if not eaten alive…!
    RS-ef540
  • PhillIT, firstly enough FUD…please!

    You “know” and have been told…many times, why FTTP is the best option. However if you are either ill-equipped or simply unwilling to accept the factually based answer, that is no one’s fault but yours… Otherwise, stop trying to be cute, it doesn’t suit you.

    You also know that not ‘every home in Australia will receive FTTP’, that is a blatant lie. Smaller/remotely located homes in areas with populations of less than 1000 will receive wireless or satellite. Tsk tsk, you certainly have the credentials for a job at the Australian or NWAT…!

    BTW – how’s that wonderful new FIXED contract of yours going? Remember the one you signed whilst telling us all the NBN is a waste because fixed is dead and wireless has taken over…LOL!!!!!

    Anyway, since you pretend, the TOP 10 (imho) reasons we need FTTP are –

    1. Perhaps the most significant. The copper network is nearing; if not past its use by date… it will not last forever. As such it needs replacing. So do we wait for a mass failure then say, umm now what?

    2. Wireless is an alternative, but with its limitations, not a plausible stand alone option (very handy in conjunction with fibre). It also requires fibre, anyway! FTTN, needs the dilapidated last mile copper and is therefore, not a plausible alternative either.

    3. Telstra own the monopoly last mile and have had a stranglehold on Australia’s comms, which will end under this arrangement. Telstra as owner of the copper will not update to fibre, without keeping the monopoly last mile (as demonstrated in 2005).

    4. Other companies will not invest with Telstra having the last mile monopoly (placing a few DSLAMs into Telstra exchanges and using Telstra’s network is hardly constructing? Also, they of course will not build infrastructure in unprofitable areas anyway (leaving the government to do so)!

    5. Some naysayers suggest enticing private companies to invest in these areas (per #4) by offering $B’s in subsidies. Problem being, inevitably the network, although largely funded by the taxpayer will be owned by a private company with “no ROI for the taxpayer”!

    6. Australia’s comms is a natural monopoly and even if private enterprise would invest nationwde, it is silly to have multiple cables from many companies, just as it is silly to expect multiple water/sewerage pipes or electricity cables to homes.

    7. Lots of Aussies currently have 3rd world comms (even those in cities/RIMs) and need improvement. The NBN will be this improvement also offering retail competition/choice, not just Telstra, rurally!

    8. History has shown speed and up/download requirements have increased rapidly each year. FTTP will ensure that we are not only replacing the ageing copper with new technology which covers our current needs but we will be ready for future needs, in line with these past trends.

    9. Anything less than FTTP “would possibly be ok for now". But as outlined in #8, what will happen if the copper fails? By utilising anything less than FTTP, further costly ongoing upgrades will be required. And in the end, we will still have an old, worn out network with a few new parts and over paid for it.

    10. The NBN will pay for itself. I’ll say it again… pay for itself.

    So what is the problem?
    RS-ef540
  • ARPU on fixed line networks declines 15% globally.
    Wireless only (non NBN) households up from 3 % to 12% in 2 years, projected 30% 2 years. Their business case is dead right there. Dead as dodo.
    Mobile devices, localised and composite interchange relayed wireless will replace fixed line and link in safey, speed, convience and pricing within 5 years. The NBN is a 1980 switch vendor NBN design from inside sales. Not in touch with global trends.
    On the fixed bit, the existing copper is pretty good, easily & cheaply replaced.
    Mined and made here, we dont export jobs or live in hostage to vendors dumping their EOL NTU and Switch or fibre into Australia and being held to ransom.
    The avg life expectancy of Australia's current fixed line network is 35 years, far longer than the fragile short life obsolete NBN choices. A lot isnt copper but really advanced relays and links. Where it is copper is pretty good and does not show any trend to systemic or increased failure. RS is not telling the truth.
    Copper is strong, bush fires, floods, winds, impacts, cyclones, whatever, pick up the phone, get the tone, you are safe. Easily and simply repaired, cheap, fast, good.
    Not with the crappy silly complicated expensive fragile NBN.
    For new global technology, new advanced electron transmission makes it sing, much faster, cheaper, broader, better, safer than fibre.
    Copper is fast, Copper is green, you crazed old fibre, you're such a has been.
    Havohej Havohej Havohej
  • LOL.. surely you jest!

    Well going by your invaluable information [sic], now that the Telstra deal is done the government should just leave everyone on "the strong copper [sic] PSTN (hmm never heard of patina huh) and supply a new copper line (and exchange to each home - otherwise what's the point when you'll only get 1 or 2 Mbps on a 20Mpbs plan) and also supply wireless, which is apparently perfect [sic]... voila instant NBN... done.

    Why didn't anyone think of this brilliant idea [sic] sooner?

    Ooh, obviously doing this, we just have to pretend that wireless is perfect (no latency, security, black spots or interference issues etc) and that we (like the 1981, 1996, 2011 scenario) won't ever need better than what we have now/copper transmission speeds... sigh!

    Is that you adds?
    RS-ef540
  • Hi Vasso, got a call from a friend who follows the Postings and he had some good advice for us. He said "Never, ever argue with idiots. You will sink to their level and they have far more experience than you".
    sydneyla
  • Hi Vasso. Got a call from a friend who follows the Posts and he gave a bit of good advice. He said "Never, ever, argue with an idiot. They'll drag you down to their level and beat you with experience". How true and LOL.
    sydneyla