Internode chief defends NBN startup costs

Internode chief defends NBN startup costs

Build price expected to be returned ten-fold

Less than a week after it was revealed the CEO of the federal government’s NBN company will be paid nearly $2 million a year for the job, the managing director of ISP Internode Simon Hackett has said the appointment is good value for money.

Hackett believes the role of Mike Quigley, the CEO of the NBN project, is “critical to its success”.

This week Computerworld interviewed industry observers who expressed concerns that the project could turn into a $43 billion bureaucracy.

“I believe that a CEO being paid 0.3 per cent of the total project budget over eight years represents excellent value if the project succeeds,” Hackett said, adding if that is the price required to secure the best person for the job, so be it.

“I certainly don't want 'second best' overseeing the most important telecommunications project in Australian history!”

On the overall economics of the NBN project, Hackett again supported the cost if the outcome can be demonstrated.

“Compared to the obvious direct and (far more so) indirect benefits of the network over the next 50 years, the build price is cheap,” he said.

“I expect that build price to be returned at least tenfold over that period in improvements in overall Australian GDP, and in increases to national and international competitiveness.

“The lack of a gigabit capable national network doesn't seem important today, but in 10 years time, its absence will be choking Australian competitiveness in a major - and unassailable - manner.”

Hackett shares analyst Paul Budde’s sentiment that the project needs to be funded entirely by the federal government in the first instance – not as a private-public partnership – and privatised later once it’s up and running.

“Like the national road system, this new form of 'road' system needs to be built on the basis that its social and economic benefits are there for all Australians and not built with rapid commercial return on investment as the main driver,” he said. “All that will do is create toll roads for the minority and what we need is a public freeway system for everyone.”

Although it was originally considered by the government, Hackett believes awarding the NBN tender to an existing provider would compromise the one thing that is critical for the new network – independence from incumbent agendas and independence from a wholesale-retail conflict of interest.

“Independent ownership of the result is critical to it being a level playing field, wholesale only network that allows all retailers to build new services on a fair and equitable basis – that allows truly fair telco competition to flourish in Australia – for the first time.”

Hackett said if the NBN achieves its stated policy objectives in full, it stands to be “the most important and the most positive change” in the telecommunications landscape since the original deployment of nationally available telephone line services.

“The next generation applications that use high download - and more importantly, high upload - speeds will be able to rely on their customers being able to use them,” he said.

“Today, it’s a patchwork quilt – you can write an application that needs, say, 10 megabits of symmetric capacity to work, but most of your intended customers can't use it.”

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Tags broadbandNBNinternodeSimon Hackett

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