NBN Co cuts ties with Fujitsu over greenfield delays

NBN Co has cut Fujitsu out of future fibre rollouts to greenfield premises amid concerns over continued delays to connection of new homes to the National Broadband Network.

Instead, some $183 million worth of contracts to build to new homes will be provided to Leighton Holdings subsidiary Visionstream and Service Stream, which subcontracted to Fujitsu under the previous agreement.

Despite initial plans for NBN Co to build a panel of contractors in greenfields, Fujitsu scored an exclusive one-year contract worth $100 million during 2011 to roll out the fibre network to new homes.

The contract was extended for a further year in February though sources told CRN sister site iTnews of continuing concern over the speed with which Fujitsu was rolling out the network to new homes.

A Fujitsu spokesman did not immediately return a request for comment.

Indications of trouble with the contract were exposed earlier this year, when NBN Co revised the greenfields rollout process in an effort to speed up time to new connections.

The new contracts, based on "an improved understanding of the market and industry feedback", will cover future applications and work in greenfields over the next 19 months.

The new contracts cover different provisions that will see Visionstream and Service Stream only take care of the fibre rollout in the greenfields estate themselves, rather than the management of fibre provision back to the nearest point of interconnect.

This will link into a temporary transit network while the permanent one is built, also under contract with Visionstream.

The permanent transit network is seen as a piece of infrastructure vital to connecting both new developments and existing homes.

Contracts are split by state; Visionstream will receive $102 million to cover Queensland and Victoria, while an $81 million contract with Service Stream covers NSW, South Australia, Western Australia and the Northern Territory.

An NBN Co spokeswoman said Fujitsu would "continue on the projects it has already been assigned".

"We have taken this opportunity to change the deployment model while providing additional rollout capacity," she said.

This will include work rolling out to some 123,000 lots in 2400 locations that have applied for fibre since NBN Co assumed responsibility as fibre provider of "last resort" in estates of more than 100 premises, under a Government mandate that began in 2011.

NBN Co has faced continued criticism from development contractors, consultants and rival greenfields operators over what many call a lack of experience and a series of "serious misjudgements" by the organisation.

The company revealed a slow rollout over last year, having only activated 110 greenfields premises by December 31, 2011. It passed 951 premises by the end of December last year, with construction underway for a further 12,723 premises.

The figures fell significantly short of expectations outlined in the company's first corporate report, a revision of which has been submitted to the Government and is expected for public release in the next few months.

One source said the company was running up to a year behind on construction out to greenfields, which chief executive Mike Quigley has blamed on the cost and effort involved in provisioning or building new fibre backhaul in lengths of up to six kilometres out to more remote greenfields developments.

The responsibility also extends to connecting new homes at remote mine sites, somewhat exacerbating the problems.

"There is no doubt that the fibre rollout in new developments is a massive undertaking and one of the biggest challenges for NBN Co," Quigley said this week.

"The timing is now right to move to a different structure that gives us greater flexibility, control and potential synergies with the wider brownfields rollout."