Syntheo hands NT work back to NBN Co

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nbntruck

blog As has been widely publicised for a while now, NBN contractor Syntheo has been suffering a greal deal of problems with relation to its rollout of the National Broadband Network’s fibre in the western and central states. So that we can all enter wholesale into yet another orgy of doubt and self-flagellation about the current status of the NBN project, here’s Syntheo’s (very brief) statement this morning that it’s handing back work in the Northern Territory to NBN Co:

“Service Stream advises that Syntheo, a 50/50 joint venture with Lend Lease, has reached agreement with NBN Co to hand back the remainder of its design and construction activities in the Northern Territory. Syntheo is committed to working with NBN Co to complete its work in Western Australia and South Australia.”

Personally I’m not entirely sure what this means, but I think it does play into the ongoing narrative that there just isn’t enough of a skills base in Australia right now to support precisely what NBN Co wants to do in terms of its simultaneous construction effort. I’ve suspected for a while now that it is beginning not to matter whether Australia pursues a fibre to the node- or fibre to the home-style rollout in the short to medium term with the NBN. It is rapidly starting to appear that what really matters for either style of rollout is how — in practice — such a rollout can be achieved with the resources, primarily human resources, at hand.

Image credit: NBN Co

39 COMMENTS

  1. Probably much more hope of rolling out fibre to 60-70% rather than 93%, in a timely manner. As you move further outside the cities and major regional centres the odds of having to bring a team in from outside increase, and thus so does time and cost.

    • There are issues on both sides Gav. Rural areas have less complicated issues, and generally the rollout is done in simple straight lines, without much interference.

      In built up areas, the very factors that make them so desirable are also factors that cause problems. They are high density, because they have plenty of MDU’s for example – an issue for any high speed broadband from HFC upwards.

      They rely on the copper networks considerably more, so where there are issues with the copper, it effects more people, and is more problematic to solve. Also more expensive.

      End of the day, rewinding back to 70% or so may not speed things up by any great amount. The remaining issues are still going to be there one way or another.

  2. It means that Syntheo has not been paying reasonable rates to Subcontractors.

    NBNco will project manage the NT rollout themselves. This removes the need for a profit to be made, allowing higher subcontractor rates and make the job much more attractive to the workforce on the ground. It also puts all Lead Contractors on notice that they need to perform or they will have the contracts taken off them.

    As for the payments already made to Syntheo, NBNco might just tell them to finish the rest of their WA/SA jobs on what they have already been paid. It is speculated that Syntheo has already been paid 70% of the contract value. One would expect that the NT Build is maybe 15% of the total contract value, the remainder would be paid upon completion.

    • The thing you’re forgetting; is that without subcontractor contracts, its easier for the LNP to tell NBNCo to down tools and restructure the network.

      Those contracts are important. I can see one of the only logical outcomes from this – being NBNCo switching to Metro—> out instead of the other way around for efficiency.

      • In terms of this announcement, Syntheo isn’t walking away from everything – they are only dropping the NT component. The SA and WA work will continue.

        Because of the sparse population, the NT rollout is quite limited in scope compared to the states – aside from the Darwin-Palmerston area, I think fibre is only going to Katherine, Tennant Creek, Alice Springs and Nhulunbuy.

        According to the info on the NBN Co website, it looked as thought the whole of the NT rollout would be finished relatively early – around 2015 or so.

        In short, it’s a manageable, relatively limited-scale, short term project for NBN Co to grapple with. Obviously there were other challenges (labour mostly, I expect) which led tot this issue. But I suspect they will resort to signing some sub-contractors to do the job directly within months.

  3. *** I’ve suspected for a while now that it is beginning not to matter whether Australia pursues a fibre to the node- or fibre to the home-style rollout in the short to medium term with the NBN. It is rapidly starting to appear that what really matters for either style of rollout is how — in practice — such a rollout can be achieved with the resources, primarily human resources, at hand. ***

    FTTN avoids the last mile trenching to each individual premise and home NTU installation which is the most labour intensive and costly component of network building. “Passing” a premise with fiber is relatively cheap; the “final drop” is the most challenging bit. This is why FTTN costs a third to a fifth of FTTP in overseas deployments.

    But building 93% FTTN (say) is still financially very risky for the Federal Government to undertake. What are the chances that Malcolm’s NBN proposals get rolled in the new Liberal Cabinet by wiser heads?

    • It may avoid the trenching requirement, but it adds in labour at other places instead. Tagging and identifying which copper pair is going where, then check that the identified copper can run VDSL, for one. I do not believe cabinet builds are going to be as simple as has been made out either. If 50% of cabinets are nowhere near power distribution then trenching will be required anyway…

      I also think the determination of costs overseas isn’t necessarily due to final mile run costs so much as those overseas rolls are being done by incumbents to their own hardware removing the expensive exercise of gaining access.

      All that said I certainly agree that Malcolm is underestimating the utility of his policy in terms of the labour cost to bring it to fruition. I’ve always suspected his policy was built on the premise that ‘its not fttp’ and assumed it would be cheaper by virtue of that fact. Because he’s refused to scope and cost his policy (because contracts) I think he will be in for a nasty surprise on recognition of those costs and what it does to the affordability of his ‘not fttp’ plan.

      Wiser heads are definitely needed.

    • Trenching for the last mile is not a requirement unless Telstra’s infrastructure is deficient, in that case then and only then is trenching required.

      Overseas cost comparisons are not 100% relevant to the costs of Australian CAN to FTTN/ FTTP migration due to living density and incumbent vs non incumbent costs.

      “But building 93% FTTN (say) is still financially very risky for the Federal Government to undertake”
      OMG you are joking right?
      You do realise that when the NBN is completed the current fixed line telephone system will be turned off? This ensures that NBN co (and the Federal Government’s investment) will make a motsa, as every house will be connected to the fibre for at a minimum a telephone line. Now this won’t happen overnight, but it is going to happen.

      Now when you say that you “don’t need” a fibre phone line because your current one is good enough, basic economics means that it needs to be shut down, to save Telstra over a $1 Billion dollars a year in maintenance and the Federal Government around $500 Million each year in USO payments.

      The NBN has more advantages than just LNP Porn & pirating slander, it will make my phone line crystal clear, for the first time ever.

    • “This is why FTTN costs a third to a fifth of FTTP in overseas deployments.”..

      ..When you already own the pit, pipe and copper drop to the premises, and assume that it is in good working order and been maintained to a level able to run VDSL…

      …Which by the way none of that is true for Australia.

      • What are you looking at that we are not aware of that proves that the Australian copper link to the residence (keeping in mind FTTN requires a much shorter link) is of such poor quality relative to overseas deployments it is a massive deal breaker that forces a halt to any FTTN rollout partial or otherwise in Australia?

        • Focusing on a specific aspect (the quality of the copper) and ignoring other aspects (like the fact the its only cheaper if the incumbent, who owns the ducts, pits and copper drop) does not invalidate the argument presented.

          • So what Telstra statements about a FTTN deployment in Australia invalidates the argument presented?

          • Telstra agreed to exit the fixed-line wholesale business to facilitate Labor’s NBN scheme.

            As it turned out, they needed a deal worth $11bn in net present value to offset the loss of wholesale revenue. $11bn is effectively the value that Telstra has placed on its wholesale business.

            Malcolm’s alternative NBN scheme also dispossesses Telstra of its fixed line wholesale revenue.

            This is why David Thodey said that Telstra is happy to facilitate a network redesign as long as the value of the $11bn deal is preserved. Telstra doesn’t really care what the Federal Government does in the trenches and pits. As long as they are compensated for the loss of their copper wholesale revenue streams to the tune of $11bn in NPV terms, they are happy.

          • From my understanding Telstra have said the $11b sum isn’t for renegotiation…

            They haven’t said they won’t want more money and/or a stake, for further negotiations.

            I believe anyone who thinks they won’t want something, is being strangely naive.

          • FACT:

            Every single public comment by Thodey is about preserving or maintaining the value of the deal, and not increasing or reducing it.

            It makes sense because the loss to Telstra from exiting the fixed-line wholesale business is the same irrespective of whichever FTTx the Federal Government settles on.

            Live with it.

          • All Thodey has said is that he won’t expect anything less than the current $11billion. Now, this does not rule NBNCo being required to pay more, further, and shareholders of Telstra may be unhappy with them signing a new deal with NBNCo that gives over more of their assets, like the copper drops, and the HFC, without changing the price.

            I hope you’re right, but as NBNAlex has pointed out, you’re being completely naive if you think Telstra are just going to hand the copper over to NBNCo, and at the very least it’s going to take time to get them to agree.

            And you said it yourself, since Telstra have more experience with their CAN, it is entirely possible that NBNCo, a new kid on the block speicalised in fibre, will not be able to do it as cheaply as Telstra could have.

            All of these factors work against the myth that Turnbull can just “switch” to FTTN come election day such that all contracts signed after that point are for FTTN.

            And that’s not even discussing the technical limitations of the technology itself. Turnbull wants a CBA to discuss if FTTH is appropriate for Australia and worth the cost, despite the fact the majority of industry experts in the area, and overseas experience, like that with Chorus New Zealand and BT, that FTTN can only really be considered an interim technology used to extend the lifecycle of the copper network as long as possible.

          • Oh, of course, they will not want more money just because they can hold them to ransom. Currently the agreement doesn’t include copper and you are suggesting they won’t try to milk it for as much as they can?? Get real.

          • @NK

            ‘All of these factors work against the myth that Turnbull can just “switch” to FTTN come election day such that all contracts signed after that point are for FTTN.’

            He never said that was going to happen anyway, all existing NBN Co FTTH contracts will be honoured so post election day the current rollout will continue on as usual whilst they discuss with Telstra and the ACCC how much FTTN rollout is actually feasible.

            ‘Turnbull wants a CBA to discuss if FTTH is appropriate for Australia and worth the cost,’

            The CBA will be done on the Labor NBN deal including all the predictions of ROI and the timelines they have predicted, the CBA is a independent analysis by the Productivity Commission Conroy for obvious reasons wanted to desperately avoid, just because Labor avoided it suspecting what the outcome would be doesn’t mean it should never be done.

            ‘ despite the fact the majority of industry experts in the area, and overseas experience, like that with Chorus New Zealand and BT, that FTTN can only really be considered an interim technology used to extend the lifecycle of the copper network as long as possible.’

            Industry expert opinion is still not a CBA, as I have stated before one of the benefits of a Coalition win is the hindsight analysis of the billions of Government debt being racked up can bring.

            Unfortunately much pro-NBN comment doesn’t rise above the ‘it’s not my money, I don’t give a stuff how much it costs – waa I want it NOW’.

            We need something more rational than that.

          • @ alain

            “He never said that was going to happen anyway, all existing NBN Co FTTH contracts will be honoured so post election day the current rollout will continue on as usual whilst they discuss with Telstra and the ACCC how much FTTN rollout is actually feasible.”

            Indeed everyone keeps ignoring that a Coalition governmnet can’t just hand their broadband plan over to Telstra, even though Telstra own almost all of the infrastructure… due to competition law. Then also, Telstra’s network can’t simply be handed over to a competitor either. Hence the inevitable legal hold-ups which will occur… but that’s all ok…apparently :/

            Also speaking og of FttN feasibility there’s still a heap of unanswered (surprise, surpsrise) FttN questions here, you might like to stop avoiding and by doing so, add something positive to the discussion for a change…

            http://delimiter.com.au/2013/03/08/hands-off-nick-ross-conroy-warns-the-abc-and-the-australian/#comment-587193

            “The CBA will be done on the Labor NBN deal including all the predictions of ROI and the timelines they have predicted, the CBA is a independent analysis by the Productivity Commission Conroy for obvious reasons wanted to desperately avoid, just because Labor avoided it suspecting what the outcome would be doesn’t mean it should never be done.”

            No the PC will IMO, be given a basic charter by MT. Find us the quickest, most economical network, which will provide improvement (as we promised). It will of course exclude funding avenues, ROI, future required upgrades etc… and wow what do you know, with such limited scope, FttN is the winner… how about that.

            “Unfortunately much pro-NBN comment doesn’t rise above the ‘it’s not my money, I don’t give a stuff how much it costs – waa I want it NOW’.”

            Absolute rubbish… the benefits of FttP/NBN from external analysis both here and abroad have been explained to you, with substantiation many times. Also the pitfalls of FttN – all of which you simply ignore out of hand. So to make such an uneducated and misguided comment is disgracefully dishonest, yet perpetually typical… and yes, we certainly need more rationality than that :)

          • Yes I know about that, but once again with feeling where has Telstra indicated the shortened copper link is not for sale or lease for a partial FTTN deployment either by them under a separate contract or by other contractors under the control of the Coalition version of the Government owned NBN Co?

          • You want me to answer “no” here, because you think that will somehow diminish my point don’t you?

            What you fail to realise is that it doesn’t. My point was that it is cheaper for the incumbent, this is following on from this:

            When you already own the pit, pipe and copper drop to the premises, and assume that it is in good working order and been maintained to a level able to run VDSL

            Now, there are some errors here, and some potentional flaws, you yourself pointed one out, that being the quality of the copper. There is another, which is that NBNCo already have a lease of the pit and pie.

            What they don’t have, and until they do, they cannot rollout FTTN cheaper than FTTH. Why? Because they would have to rollout their OWN copper drops. Which results in no costs reduction in labour and actually would be more expensive than pure FTTH due to equipment and cable costs.

            That, my dear alian, is what invalidates the argument presented. And the fact the $11b deal is not open for negoication means that Turnbull can’t hope to “get a bargain” for getting the copper to hand over to NBNCo for them to rollout FTTN.

            So, to answer your question:

            Telstra have never indicated that the shortened copper link is not for sale or lease for a partial FTTN deployment either by them under a separate contract or by other contractors under control of the Coalition version of the Government owned NBN Co.

            Answer your question adequately?

          • **its only cheaper if the incumbent**

            FTTN FUD.

            So, you’re saying that if Telstra approaches ServiceStream for a contractual quote on building FTTN, they will get one price… and if NBNco approaches the same engineering firm for a quote on building FTTN in an identical location utilising identical pre-existing infrastructure, they will get a higher quote?

            What a load of hogwash.

          • And you think Optus or whoever could roll out FttN as cheaply as the incumbent who owns the copper network and associated infrastructure?

          • It’s the “using preexisting infrastructure” that’s the problem with that statement. NBNCo don’t have any rights to the preexisting infrastructure expect the right to use the pits and ducts. You’re ignoring the fact that NBNCo would have to buy or lease the copper.

            So the quote itself might be the same, but the overall cost? Hardly.

          • David Thodey has stated explicitly that:

            i) Telstra will facilitate any government decision to revert to FTTN (which means copper access) as opposed to FTTP engineering design;

            ii) Telstra will seek to preserve the value of the deal (not increase or decrease);

            iii) the individual value of the different components of the deal may shift as long as the aggregate value of the deal ($11bn) is preserved.

            Everything that Thodey has said is completely contrary to the FTTN FUD that Telstra will demand “extra compensation” for copper access.

            Hence, there is no fundamental difference in cost (other than the fact that Telstra, as a private telco, may be more efficient and experienced in building networks than a cobbled-together GBE with zero track record).

          • 2 Years for just ONE exchange using their own pits ducts etc (Bris South ) – 100/5 is the best on offer. Very Very ordinary

          • It was 18 months and that included shutting down the old exchange because the QLD Government wanted the site then building a new exchange building from scratch and transferring all the connections to that new site whilst rolling out FTTH to all residences hung off the Sth Brisbane exchange.

            As far as I am aware the NBN Co uses existing Telstra exchange buildings to house their equipment and use Telstra ducting, not build a new building from scratch for each roll out area.

            If you are going to compare ‘ordinary’ make sure the ordinary is equal.

          • In other words, if/when NBNCo are late no excuses are ever accepted and if/when Telstra are late, every excuse is most acceptable and understandable…

            *sigh*

          • So Thodey is planning to rip off the Telstra Shareholder by giving away their copper asset for free, but who remediates and maintains that at what cost.? or on a lease basis as per current for customer. ?
            Hmm very cooperative with the LNP compared with the negotiations with the NBN, funny delays due to Telstra Remediation may just take on a different slant ?

            “Telstra, as a private telco, may be more efficient and experienced in building networks than a cobbled-together GBE with zero track record).”

            The majority of the network and infrastructure was built by the Post Master Generals Department/Telecom Aust (a GBE), since then as a Private Company it has gone downhill as far as maintenance of fixed infrastructure is concerned, in fact they depend on ex Telecom contractors for much maintenance and they are disgusted with the state of that infrastructure.

        • The flip side of course being, we all cross our fingers and blindly hope the ageing copper is ok, just for Malcolm ;)

      • You know the hypocritically laughable part about this, IMO Dan?

        Those forever contradictory NBN naysayers, who have argued FttP won’t have the shelf life claimed, believe copper will last forever (or longer) :/

      • Dan, not only that, but the FTTP last mile is only approx $12Bill out of the total. Included in there for both options is Backhaul, Transits, POI’s, Systems and premises/exchanges with power/No Break..

  4. And here is the 457 argument occuring in politics at the moment.

    To bring in labour from overseas, or not?

    Will it be cost effective? (hiring on 457s(
    Will it be timely? (training up 457s, and dealing with re-dos).

  5. I’d take a job with NBNco if they stay as a governmetn entity.. unfortunately my skills at fibre splicing are pretty low :P

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