NBN critic Concept Economics goes bust

NBN critic Concept Economics goes bust

Summary: 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.

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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.

Topics: NBN, Broadband, Government AU

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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Talkback

8 comments
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  • NBN

    Why debate this Senator Conroy doesn't even enter into discussion.
    Somehow he got elected to represent us. Then he refuses to discuss anything with the public.
    The public are only the poor individuals that put him in office. Why discuss anything with us!
    We don't need to understand anything about a network he is building for us.
    anonymous
  • Maybe...

    They should have coducted a viability study on themselves. I'd suggest that its report be sent to the fate reserved for the oganisation that created it.
    anonymous
  • Maybe!

    Spot on.
    anonymous
  • NBN

    If all the economists had had there say in the 1880's then we would still be using carrier pigeons today and Mr Bell's invention would be a side so curiosity.
    anonymous
  • A grasp of economics...?

    Ah, our old friend and economics guru Henry Ergas... Looks like his own grasp of economic realities is far removed from what actually works in a real economy.
    They are now learning the great divide between theory and reality, between what they espouse others should do and what they themselves actually achieve in the world of actual business practices.
    Yes, Henry Ergas delivers balanced and bipartisan analysis on Labor Gov proposlas between working for Malcolm Turnbull...
    Hmmmmm....?
    You must first have a grasp of market dynamics and the realities of consumer and business spending investments before running your own business, much less cost out some fairy numbers on what the NBN based telecoms future of the Australian user will be.
    Do we really expect a person in the employ of the Liberal Party to come up with real numbers and analysis on the Labor driven NBN?
    anonymous
  • A grasp of economics...?

    Well, I'm not holding my breath waiting for Conroy et al. to provide any numbers...
    anonymous
  • Yeah yeah

    Howard, Minchin and Coonan, did SFA for 12 years.

    Conroy certainly aint perfect and his dopey internet filter proves that, but at least he's doing something and not just hoping some US ring ins will save the day, as Howard was sadly mistaken with the three amigos.
    anonymous
  • Consultation

    Michael - give credit where it is due - of all the countries I have worked in, Senator Conroy is by far the most knowledgeable and consultative Minister for Telecomms I have ever come across. Whether or not I entirely agree with his approach he seems to make an effort to be everywhere, and has not been shy to discuss his vision - I frankly hope he does not burn himself out..
    anonymous