NBN board clean-out could jeopardise project says analyst
Simon Lauder reported this story on Monday, September 23, 2013 12:11:00
PETER LLOYD: Fast, affordable and sooner was the Coalition's election slogan for its national broadband policy.
But how fast and how soon has just been thrown into doubt.
It's understood that all but one of the board members of the NBN (National Broadband Network) have submitted their resignations to the new Communications Minister Malcolm Turnbull.
Now we know that Mr Turnbull has no faith in the board-backed NBN rollout plan.
But are the mass resignations a sign of the board's lack of faith in the new government?
Simon Lauder reports.
SIMON LAUDER: Malcolm Turnbull was not available to talk about the board of NBN Co this morning, but here's what he had to say about it earlier this month, before he was sworn in as the Communications Minister.
MALCOLM TURNBULL: While I have no criticism to make of any of the individuals, it is remarkable that there is nobody on that board who has either run or built or been responsible for building or managing a large telecommunications network.
And given that is the core business of NBN Co, that is a singular deficiency.
SIMON LAUDER: The Coalition has previously blamed the board of NBN Co for failing to deliver broadband efficiently. Now it's understood all but one of the seven board members have submitted their resignations, including the chairwoman Siobhan McKenna.
The Government may ask some of them to stay on, including Kerry Schott, who is the former head of Sydney Water and Alison Lansley, a former partner at law firm.
NBN Co chief executive, Mike Quigley, already announced his retirement plans in July, after months of criticism from the Coalition over delays to the NBN rollout.
The new Government means a radical overhaul of contracts the NBN Co will oversee, because the Coalition plans to deliver internet fibre to the node, rather than directly to premises.
It also plans to open the scheme up to greater competition. TPG Telecom has already announced plans to take advantage of that, by connecting fibre to apartment buildings.
Telecommunications analyst Paul Budde says the resignations show the board doesn't support the Government's plan.
PAUL BUDDE: It clearly shows that the current board doesn't believe in the plans or, in any case, the information that we've got so far from the Coalition Government on its form of the NBN.
I think a key issue in my opinion is the fact that if you open up NBN competition to the NBN in cities, and we've already seen some announcements there, that means that it becomes cherry picking.
You know, you get the profitable areas will be done by the competition, Telstra, TPG whoever. And then NBN Co is left with the non-profitable areas. And obviously will then operate at a loss under the current charter, obviously that's impossible.
SIMON LAUDER: So you believe the board members don't want a part of it?
PAUL BUDDE: No, if, I think there's more at stake, Simon. We also, we've seen quite personal attacks from Malcolm Turnbull on board members. And that's very unusual you know; you can criticise the company or policies or strategies, but to be personally attacking also makes it very, very difficult for individual people then to stand up and things like that. There's lots more at stake.
SIMON LAUDER: The Coalition intends to have the operation of NBN Co reviewed in an audit. It's expected to appoint the former head of Telstra, Ziggy Switkowski, to run the NBN Co and oversee that audit.
Paul Budde says appointing a new board could delay the National Broadband Network by several years, and the risk is that it may unravel entirely.
PAUL BUDDE: They mentioned in the running up to the election that none of that would happen. But here we now see that, yes, there will be cherry picking. Yes, the board is resigning. Yes they have to start some massive changes. This is not going to happen in 100 days.
So yes, Simon, I'm very, very fearful of delays.
And if you look back in the telecommunications industry over the last decade or two decades, then these sort of massive changes typically take two, three, four years. This is not just 100 days. This could delay the whole situation with several years.
But if you just want to come in with a big axe and make changes that way, then there's no other way that this is going to take many years to solve it because then everything unravels.
SIMON LAUDER: Just because most of the NBN board members have offered to resign, it doesn't mean they will. It's now a matter for the Government.
PETER LLOYD: Simon Lauder reporting.