Networking equipment suppliers for the National Broadband Network (NBN) build will be restricted to just two primary vendors, according to NBN Co chief executive Mike Quigley.
Mike Quigley
(Credit: Alcatel-Lucent)
Quigley also said that operating and billing systems to support the NBN would most likely be awarded to one vendor, while civil construction would be awarded to several prime contractors.
A major battle for survival is set to take place over the coming three years between optical network equipment providers Alcatel-Lucent, Ericsson, Huawei, Nokia Siemens Networks and NEC.
In his first media briefing to date, a cautiously-worded Quigley today said the NBN Co would limit its network equipment supplier field to just two for what is set to dominate revenue streams amongst suppliers over the next decade.
"When it comes to equipment, we'll probably go through a process where we have expression of interest (EoI) where we assess the capabilities of various equipment vendors," said Quigley.
"[After the EoI] we'd probably aim to come with a shortlist, then come down to two primary vendors, who may work with other vendors to supply pieces," he said. The reason for restricting the equipment tender to just two vendors was to minimise interoperability problems that may arise between different supplier's equipment, such as fibre-based nodes and modems.
Industry estimates of the value of networking equipment to build the NBN have placed it at around a third of the total cost of the network, which is currently ranging between $22 billion and $43 billion. The majority will be spent on civil construction work.
"We'd be looking for an overall integrated solution so we don't have issues of compatibility between boxes. We'd then be looking to those two chosen vendors to resolve some of the interoperability issues and building an integration lab that would facilitate that," said Quigley.
The big spender in the industry, Telstra, sent shock waves through the telecommunications supply sector when it announced its goal to shave $1 billion from its capital expenditure budget this year. It had previously awarded Ericsson a $1 billion contract to build its Next G network and a lucrative contract to Alcatel-Lucent for its near-complete multibillion-dollar Next IP build. While the deal saw Ericsson's local revenues hit $1.4 billion in 2006, this year its revenues had fallen to $800 million. Alcatel-Lucent's revenues were on par with Ericsson.
Though its likely they need a 'billion' system to create money. I think you meant 'billing'