Tassie NBN Co ditches Aurora JV

The Federal Government and NBN Co have ditched plans to establish a joint venture operation with Tasmanian state-owned utility, Aurora Energy, because it was delaying the construction of the state's fibre network.

Tasmania NBN's chief executive and NBN Co director, Doug Campbell, told ZDNet.com.au last week at the Realising Our Broadband Future conference in Sydney that Aurora Energy was not a joint venture operator, as was initially planned.

Doug Campbell, head of NBN Tasmania (and Market Clarity CEO Shara Evans)
(Credit: Liam Tung)

"At this point in time, it's not operating as a joint venture. They're just acting as our agent. If they have fibre, they lease it to us. That's not to say we won't enter a joint venture, just that we're focused right now on getting services up as quickly as possible," said Campbell.

"Negotiations over the joint venture were slowing down the construction aspect, so we said, let's put that to the side and let's get on with construction and get people working on a commercial basis, and we'll go back to talking about the joint venture later."

In July Conroy's office said that it was in "very advanced negotiations" with Aurora which were believed to have been aimed at vending in the utility's fibre assets.

The failure to establish a joint venture operation, however, has not stopped Aurora from acting as NBN Tasmania's procurement agent, over the past fortnight announcing several new supply deals for work in the state, including last week's contract with Leighton construction subsidiary, John Holland, and Corning for its fibre cable requirements.

Aurora owns major backhaul links across the state which has enabled the government to kick start the build in Tasmania. Bartlett ealrier this year spoke with ZDNet.com.au's Twisted Wire about the value of Aurora's fibre assets during the period it was in negotiations with the Federal Government.

At an earlier press briefing, Minister for Communications Stephen Conroy and Tasmanian Premier David Bartlett joined forces last week to dispel claims that the Tasmanian rollout would cost between $5,000 to $7,000 per household, as some organisations have previously suggested.

The only figure that has been revealed for the state so far is that the $38 million initial phase, which covers new backhaul links and "last-mile" fibre connections to 5,000 households. It represents 2.5 per cent of the total 200,000 targeted for 100Mbps fibre.

"What you're adding up in that $38 million is a whole range of backhaul network that will serve an enormous number more houses, than simply the three or four towns that you're referring to," said Bartlett, defending the initial phase costs.

Bartlett said there was an "obsession with price" in relation to the NBN, adding that "the rule of thumb here is investment in infrastructure that drives competition in the market will deliver more bandwidth for lower price. And that is a fundamental of what's going to happen in Australia, no matter what."

Conroy said that to calculate the cost per household based on $38 million for backhaul and spread that across 5,000 households — which would equal to $7,600 per household — was "not just bad maths, but bizarre maths".

"The NBN and Tasmania are still finalising that and are getting some indicative costing. We have a rough idea of what we think it's going to cost but NBN Tasmania, NBN Co and the board are putting all those final touches together," said Conroy.

"As a Commonwealth, we don't want to reveal what our envelope is, because we want to try and obviously get the best value within that envelope. But the rollout is actually being worked through with the Tas NBNCO and the National NBNCO boards."

Later Campbell explained why the cost was not yet known. "We can't really advise yet what the whole cost will be because we're still learning from tenders we're putting out what equipment costs will be, what civil costs will be, what installation costs will be. There is no real firm estimate of the total cost at this point in time," said Campbell.

However, Tasmania NBN Co, which will inform NBN Co of the factors that will influence the total cost on the mainland, has an idea of the range of costs it will face based on similar deployments around the world. "Clearly we know the range of costs around the world and we have got stay in line with those," said Campbell.

Tasmania will provide critical lessons for the NBN Co's mainland deployment, and according to Campbell, Tasmania will likely be in the upper limits of metropolitan mainland deployments.

"[The cost per household] will vary in Tasmania from other parts of Australia because of its lower density, greater distance to reach homes, and there are not so many high rises in Tasmania as there are in Sydney or Melbourne where the costs could be much lower," he explained.