Australia - Govt awarded McKinsey review of basic telephony available on NBN

[the australian] THE Gillard government has awarded McKinsey, co-author of the $25 million implementation study into the NBN, another multi-million-dollar consultancy.

The Department of Broadband, Communications and the Digital Economy has hired McKinsey for $4.98m to consult for the company charged with ensuring basic telephone services are available to all Australians under the $43 billion network.

This latest contract adds to a slew of consultancies related to the embryonic NBN, which has employed advisory firms, information technology specialists and headhunters.

The department disclosed the contract for USO Co, the firm being set up to take on the universal-service obligation, on the federal government's tenders website, AusTender, on Wednesday. The contract, and the likelihood of yet more consultancies, was foreshadowed in documents obtained by The Australian under Freedom of Information laws, which say the department wanted McKinsey to look at the scoping, costing and funding of USO Co. The department wanted to hire McKinsey because of its "deep understanding" of the government's broadband policy and of negotiations between Telstra and NBN Co.

Specialist technology and legal advisers would also be hired as the project on the USO proceeds, the documents show.

Telstra and NBN Co are in talks over an $11bn deal under which Telstra would decommission its copper network and cable broadband service and transfer customers to NBN Co's network. Under the deal, Telstra would be relieved of its USO requirements.

The department's spending on consultants has increased greatly in the past three years, largely because of the NBN.

Revelations about the new consultancy for McKinsey came as the government said it was in talks to progress key legislation to split Telstra's business in two.

The documents revealed that Communications Minister Stephen Conroy had been warned by his department that the legislation needed to pass during the spring parliament sittings in order for the NBN implementation and the $11bn Telstra-NBN Co deal to proceed.

A spokeswoman for Senator Conroy said the government had been warning that "every day of delay is another day of higher prices, less choice and fewer innovative services for consumers and small businesses".

Opposition communications spokesman Malcolm Turnbull said it was "concerning" that the deal between Telstra and the NBN Co depended on the passage of the law.

"The main impact of that legislation would be to remove the deal from the normal scrutiny of the ACCC and national competition laws," Mr Turnbull said.

"Just how anti-competitive and bad for taxpayers and consumers is the proposed deal if it can't stand up to this scrutiny?"

Mr Turnbull confirmed he was in talks with the independents in both houses about amendments he wanted to the bill. If all of the amendments he was seeking were rejected, the Coalition would not support the legislation.

"If we can achieve some but not all of our amendments then we will consider our position," he said. Greens MP Adam Bandt said his party was "generally supportive" of the laws but was still opposed to the plans to privatise the NBN Co.


McKinsey lands new contract on phones