An NBN credibility crisis

NBN Co’s climb up the painful learning curve has now seen the rollout fall three months behind schedule and with a change of government almost a certainty, does it need to build a construction arm?

While the Labor party played out a risible leadership pantomime yesterday evening there was another farce of sorts playing out at another corner of the national capital, and in a way both are a cogent reflection of a dysfunction that has doomed the Gillard government and sunk its NBN.

NBN Co chief executive Mike Quigley should be grateful that the collective opprobrium directed today toward Labor’s leadership woes has allowed him to come clean on the progress of the NBN rollout, without copping a caning. This stroke of good fortune, however, doesn’t mask the bad news.

The news isn’t great folks. But we already knew that, didn’t we?

The target of wiring up 341,000 premises — 286,000 brownfields premises and 55,000 greenfields premises — is now a distant memory. The best we can hope for now is an overall figure of 220,000 premises, and it’s a big if, because the there is no clarity on just how NBN Co and the contractors will remedy the situation that has plagued the rollout so far.

Quigley, to his credit, was contrite enough to acknowledge the need for accountability but the finger of blame is firmly pointed at the contractors. The problem, as Quigley puts it, isn’t the shortage of staff but rather the getting the right people to do the right job. So what we have is a promise that NBN Co will take on a greater oversight of the fibre rollout, as evidenced by the move in the Northern Territory, and take a keener interest in keeping the contractors honest, with or without the threat of legal action. Getting embroiled with the contractors in a punitive legal expedition is something that will ultimately hinder the rollout, so Quigley is perhaps more inclined to dangle the carrot rather than lash out with the stick. And his comments yesterday reflect this emphasis on cooperation with Syntheo, Silcar, Visionstream and Transfield.

The one thing Quigley was keen to avoid was projecting the idea of NBN Co becoming a construction company. That may be the case for now but there is nothing to suggest that it might not have to pursue this option sometime in the future.

NBN Co doesn’t need to become a construction company overnight, but it can develop a substantial construction arm. In fact, there’s a good chance that had NBN Co decided to do the rollout on its own in the first place it could have potentially saved some money.

Mark Gregory, senior lecturer in electrical and computer engineering at RMIT, for one has long opined that NBN Co’s failure to create a construction division at the outset was a strategic failure.

As he points out the fibre rollout is beset with problems - the use of contractors, training of new people and a lack of penalty clause eats away at the motivation for the contractors to meet or exceed deadlines.

The three month rollout delay perhaps bears out Gregory’s conjecture, but it’s not the end of the world. There is still a way to salvage the situation but the current NBN Co board is running out of time.

Quigley pointed out yesterday that the problem isn’t the shortage of labour and he’s right. There are plenty of people with the requisite engineering skills and the project management experience who would be happy to work for NBN Co’s construction division.

NBN Co’s action in Northern Territory doesn’t need to be an anomaly it could be a precursor to a new approach to rolling the fibre out quicker, especially if it is serious about hitting the 1.3 million premises target by the end of FY2014.  Of course politics will play a hand in what eventuates, but let’s not forget that the Coalition’s fibre-to-the-node (FttN) alternative isn’t exactly a walk in the park.

What was interesting about Quigley’s admission yesterday was his continued belief that the missed targets and the mounting criticism matter little in the grand scheme of things, just an early hiccup in a massively ambitious project. That may be true but this attitude engenders very little faith in the public and probably wouldn’t please NBN Co’s largest stakeholder the federal government.

NBN Co’s climb up the painful learning curve has now seen it fall three months behind schedule and with a change of government almost a certainty, let’s hope it’s not a futile journey. After all Labor’s grand NBN vision might be counting its last breaths but there is still plenty of  hard work ahead in making sure that the Coalition’s NBN isn’t a dud.