Visionstream must meet NBN contract terms to keep Tasmanian rollout

Communications Minister Malcolm Turnbull has indicated that Visionstream asking for more money for NBN fibre network construction in Tasmania could be grounds for breaking the contract.
Written by Josh Taylor, Contributor

A contract that was due to see the National Broadband Network (NBN) roll out across 190,000 premises in Tasmania is under review after NBN Co revealed that the contractor, Visionstream, has been asking for more money to complete construction.

Turnbull's announced strategic review of the NBN rollout has recently focused on the fate of the 500,000 or so premises that had been promised fibre to the premises in the next three years under Labor; in particular, the 190,000 premises in Tasmania that the Coalition had indicated would continue to get the NBN because the contract with Visionstream had been signed to see that portion of the fibre network completed by 2015.

While Labor is accusing the Coalition of "breaking 500,000 promises" in removing information about the construction at those premises from NBN Co's maps, Turnbull has said that the previous government had used misleading metrics, and construction had not commenced in many of those places any further than just design work.

As late as last week, NBN Co approved construction for 150,000 additional premises above the 300,000 that Turnbull already indicated would still go ahead, but the fate of construction in Tasmania appears to be uncertain, with the minister revealing that Visionstream wants changes to the contract.

"Visionstream has done virtually no work since July — well before the election. And they have asked for a very substantial increase in the rates. Because we said before the election, 'Yes, we'll honour agreements'," Turnbull told Meet the Press.

"But an agreement won't be performed unless both sides honour it. And, of course, if contractors are saying, 'We cannot make money. We cannot even break even on the rates in these agreements,' then they've got to be looked at very carefully. And this is all part of the strategic review."

NBN Co last week suggested that some of the reason behind the delays in the construction of the NBN since the election are largely due to needing to recommence Telstra pit and duct overhaul following the well-publicised asbestos issues.

Although the outcome of the review will not be known until December, Turnbull said that the likely outcome will see most existing premises miss out on fibre to the premises.

"In all of these fixed-line areas, people will get access to the NBN. It may not necessarily be with fibre to the premises. In fact, for most of the brownfield areas, it's unlikely that it would be. I would like to build as much fibre to the premises as we could, but we've got to get the cost down," Turnbull said.

Speculation that the cost to implement the NBN would be lower if Huawei was allowed to work on the network has been strongly denied by the company's biggest rival Alcatel-Lucent, and Turnbull said he is not in a position to say whether the decision by the new government to keep the ban would lead to higher costs.

"I don't know. I can't — that's speculative, but that's the reason; if you go to Vodafone or Optus, who have Huawei equipment in their networks in Australia, 'Why did you buy it?', they will say, 'you know, the equipment works, and it was a lot cheaper', no doubt. So these are the things you've got to weigh up."

To help the government weigh up its decisions over changes to the network, the Department of Communications released a request for tender on Friday asking for commercial and strategic advice regarding implementing a revision of the AU$11 billion Telstra deal with NBN Co.

Those wishing to access the full request for tender documentation associated with the tender are required to sign a deed of confidentiality.

The revision of the deal will likely see NBN Co gain access to the last section of the copper network to each premises needed for the fibre-to-the-node network. Neither Telstra nor the government have indicated whether Telstra or the government would have ownership of the copper, but Telstra CEO David Thodey has insisted that Telstra will keep the value of the AU$11 billion deal.

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