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  • News - Written by on Monday, February 14, 2011 13:25 - 12 Comments

    Caliburn rubber-stamps NBN business case

    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 and publication, the Government had asked Greenhill Caliburn to review NBN Co’s Corporate Plan and provide a commercial assessment which 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 rollouts 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.

    Communications Minister Stephen 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 in his statement.

    Image credit: Dominik Gwarek, royalty free

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    12 Comments

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    1. Posted 14/02/2011 at 1:29 pm | Permalink |

      Comment storm in 5…..4…..3…..2…..1….cue in!

      • Posted 14/02/2011 at 2:32 pm | Permalink |

        Storms aren’t good, in storms NBN Co’s cables will fall off the polls… :P

        • Posted 14/02/2011 at 2:42 pm | Permalink |

          No, it’s gravity and the poles fault. If it wasn’t for gravity, they’d stay up.

    2. Posted 14/02/2011 at 3:35 pm | Permalink |

      Annnnnnnnnnnnd…in steps The Australian:

      http://www.theaustralian.com.au/australian-it/telecommunications/wireless-a-threat-to-nbn-governments-own-consultant-warns/story-fn4iyzsr-1226005795467

    3. Jay Z
      Posted 14/02/2011 at 4:33 pm | Permalink |

      hahaha isn’t it funny? Out comes some positive evidence on the NBN yet trust The Australian to start scouring for any anti-NBN propaganda it can muster from it, ignore the positive and write an article condemning the NBN…

      and people read that sad excuse for a media outlet…

    4. midcoast
      Posted 14/02/2011 at 5:50 pm | Permalink |

      I bet if the Australian was all for the nbn it would be the greatest paper on the planet.
      The only reason the paper is a hack is simply because it puts a god case on why the NBN is just another white elephant done by Labor

      • Posted 14/02/2011 at 6:09 pm | Permalink |

        Nope.

        If The Australian was an impartial “reporter” of news, instead of “twister” of news, whether the NBN is “good” or “bad” still wouldn’t matter.

        When a news outlet writes off editorial stance as factual reporting – (as the Oz does with many subjects) – they lose credibility in many people’s eyes.

        • Simon Reidy
          Posted 14/02/2011 at 7:15 pm | Permalink |

          Exactly. Unfortunately what would once have been called an editorial or opinion piece (at least Renai understands this concept :)) now gets passed off as “news” by The Australian. The fact that they have turned a positive report for the government into a negative one, by picking out selective bits of information to suit their needs (cherry pick much?) is so blatantly obvious it makes me want to puke.

          If they were a good media outlet, rather than a coalition propaganda machine, they would get both sides to the story (a concept real journalists have understood for hundreds of years) and let the reader make an informed decision about the pros and cons of any given government project. They dont even try to hide their hatred for the NBN, where as anyone that actually knows the facts about the NBN and/or works in the industry, knows its going to be a solid government investment, an awesome thing for every area of the IT industry, and indirectly improve areas of all of our lives in countless ways.

        • Jackey J
          Posted 15/02/2011 at 1:48 am | Permalink |

          Hardly a ringing endorsement though given ‘Reasonable’ is the term used, especially in response to the NBNCo ‘assumptions’.

          There are a lot of weasel words and caveats in the Exec Summary which allows it to be used as ammunition against the NBN. It is easy to see how parts of the report can be picked up and run in isolation to reflect badly on the process.

          eg: Disclaimer:

          We have assumed and relied upon, without independent verification, the accuracy and completeness of
          the information publicly available, supplied or otherwise made available to us by the Commonwealth and NBN Co and its advisers, and have further relied upon the assurances of the representatives of the
          Commonwealth and NBN Co and its advisers that they are not aware of any facts or circumstances that
          would make such information inaccurate or misleading.

          • Posted 15/02/2011 at 6:25 am | Permalink |

            Not sure how that relates to The Australian and its misleading reporting of the NBN, but anyway.

            The report (and business plan) was written under the assumption that Telstra wouldn’t participate in the construction of the network. Now that Telstra’s participation is not much more than a formality away from 100% confirmation, the business plan is greatly solidified.

            With a decommissioned copper network, uptake figures – (measured at around the 65% mark in all reporting so far) – surges beyond 100%.

            • Jackey J
              Posted 15/02/2011 at 10:46 am | Permalink |

              I guess the point I am trying to make is that the NBN is a victim of its own secrecy. This ‘Independent report’ (I use the term only in reference to the fact that NBNCo did not write it) was based only on the information that the Governement and the NBNCo gave it. The following is a passage from the Buisness Spectator which reasonates with me.

              “The review’s significance shouldn’t be over-stated – it is an opinion on the reasonableness of someone else’s opinions, not any kind of guarantee that the myriad of assumptions that under-pin the corporate plan will be proven correct with hindsight – but there was another element of the report that is worthwhile.”

              http://www.businessspectator.com.au/bs.nsf/Article/Stephen-Conroy-NBN-Co-Greenhill-Caliburn-pd20110214-E38S5

              With that in mind you have 3 articles on the report, with 3 different news agencies, coming to 3 different conclusions.

              The Australian : Report shows NBN fails to consider the impact of wireless, which it does.
              Delimiter: Caliburn rubber-stamps NBN business case, with a picture of an Excellent tick?
              Business Spectator: somewhere in between.

              My view is the report was a waste of time as it was always going to show that the NBNCo was going to that NBNCo plan and assumptions were sound. Barring a gross micalculation, aka Liberals last election.

              Build the thing and it will live or die on its own merits through the election cycles.

              • Posted 15/02/2011 at 12:10 pm | Permalink |

                I agree the report was a waste of time; these things aren’t produced unless they are going to show more or less what the person commissioning them wants to be shown. I’ve reported on too many consultant reports produced for Government to have any other view of them.




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