Business modelling – the key to success of the NBN.
The trans-sector approach towards the NBN provides us with the right concept and guide to start building the business model. Once the government has made some firm commitments on how it will use the NBN for the healthcare, education, energy and other sectors the business implementation team can start looking for empirical data that can be put into the business model. We can’t start to bake the cake until we know what the ingredients are.
Listening to some of the political discussions it is still unclear what the government’s real social and economic objectives are, to warrant this massive taxpayer-funded investment. The longer the government waits before making its trans-sector commitments the longer this confusion will persist. The infrastructure approach is a utility play but at the same time we have to realise that this must be demand driven by industry committed to the financial and economic benefits and the government acting on behalf of a range of social and commercial sectors. Therefore parallel development of the supply side and the demand side is needed, at least at a policy level at this stage, so that we all know what the ingredients are going to be.
It is also not clear to many involved in the discussion that this is an infrastructure play and not a telco play. The NBN is not a Christmas gift to the already rather profitable telco industry.
While, intuitively, we all see the enormous benefits of this trans-sector approach the industry (sectors) need to follow up with ideas, applications, content (as well as with proper market analyses), costings, sales and marketing plans and so on. However, we do need tangible government leadership and policies that will enable these sectors to move in this direction. Only when these are in place will the industry be able to develop its own plans.
By now we should be moving the focus of the discussion to the business side of the plan, but an absence of that trans-sector commitment is stopping us from doing this. Without that commitment any business modelling is nothing more than a stab in the dark. It is not simply a case of ‘build and they will come’. Such an approach will not the deliver the investment and business commitment needed to build the NBN.
Without the governments commitment we cannot properly assess the investments needed, and the risks and returns involved. Healthy discussions are also necessary to get the models right, so transparency and openness is a must.
As indicated in our report: Global – Trans-sector strategies – an empirical approach we need to come up with more substantive quantifiable data to give justification to the process – and as with the vision, this needs to be well-communicated.
The process should include several important facts:
- that business planning is an important discipline and part of investment decision-making;
- that vision and strategy without an implementation plan is flawed;
- that utility and infrastructure investments have become more focussed on market demand (both social and commercial), ahead of historical cost and technology considerations.
As has been indicated by the Digital Economy Industry Work Group in their discussions with the Minister, this needs to be accompanied by a transparent governance plan that will engender confidence that there is proper coordination and control.
The trans-sector approach will provide all those involved with a checklist to see if the project is indeed moving in the right direction – who is lagging behind, which parts are missing, and so on. There is no doubt that ongoing adjustments will need to be made and there is no doubt that we don’t have all the answers at this stage. However, if we have a good plan linked to good governance that will be our guide through this process.
The Minister has clearly indicated that at this stage he is the person in charge of the strategy. At the same time NBN Co has indicated that they are ‘the plumbers’. This makes it very clear what decisions and directions we can expect from whom.
However, NBN Co will need to be built on the trans-sector vision created by the government and it will have to facilitate the social and economic benefits that the government has indicated will flow from this investment.
This approach will require NBN Co to look across the sector silos with an open mind, helping define and develop the new paradigm(s). Typically, as program managers and as an agent of change it will need to cut across traditional structures that rely on the long-established order of things, including stakeholder management, coordination and communications, and also through integration management (to name just a few):
- developing a control framework costing, evaluating, prioritising etc;
- integrating the divisive vested interests and agendas of industry;
- sifting through new, planned and competing technologies;
- identifying new end-to-end (cradle to grave) operations, systems and processes;
- assessing new resource needs, retraining and reskilling requirements;
- integrating capex vs opex maintenance dilemmas; and
- integrating existing and live networks.
It is important to note that there will not be one business plan; every single sector involved in the NBN will have to go through exactly the same process.
As soon as we have the government’s full commitment to this approach we can move into proper business planning. This will certainly also help push the project over the political hurdles that remain ahead. To guarantee its success the Opposition and others critical of the plan need to be persuaded with sound economic and social arguments, underpinned by sound economics.
Paul Budde
- Australia – National Broadband Network – Overview & Analysis
- Australia – National Broadband Network – Critical Considerations
- Australia – National Broadband Network – Competition and Regulations
- Australia – National Broadband Network – Design and Deployment Strategies
- Australia – National Broadband Network – Early Projects
- Australia – National Broadband Network – Industry at crossroads
- Australia – National Broadband Network – NBN Co and Infrastructure
- Australia – National Broadband Network – Overview & Analysis
- Australia – National Broadband Network – Telstra
- Australia – National Broadband Network based on Trans-sector model
- Australia – National Broadband Network Trans-sector projects
