Conroy factor hamstrings an NBN Co evolution

In need of an apolitical stance ahead of the election as well as a boost in rollout operations, NBN Co's chair is finding herself hamstrung by the minister's close ties with management.

The parliamentary committee overseeing the national broadband network might want NBN Co to update its corporate plan to prepare strategies to minimise the risk in any policy changes flowing from a change of government in September, but there is a small obstacle to that in the form of Senator Stephen Conroy.

The recommendation, in the fifth report of the joint oversight committee, is sensible, given the fundamental differences between the Gillard government’s fibre-to-the-premises policy and the mainly fibre-to-the-node plan the Coalition has published.

It does make sense for NBN Co to at least start considering how it might have to change its existing rollout schedule and, indeed, its own structure and resourcing if the government and its NBN policy changes.

In a dissenting report, the Coalition members of the committee continued to urge NBN Co to undertake a rigorous analysis of the alternative options to its current NBN model, including options such as fibre-to-the-node and an upgrade of the existing HFC networks operated by Telstra and Optus, saying that the most cost-effective solution for very fast broadband will vary from area to area, but in many cases would involve re-use of existing network assets.

The problem for NBN Co, of course, is that even if it wanted to heed the committee’s advice there is no prospect that Conroy, its minister, would countenance it doing anything that might appear to give credibility to Malcolm Turnbull’s version of the NBN or which could in any way discredit his own $37.4 billion-plus NBN.

The Coalition member of the committee referred to the farcical Senate Estimates hearing last month at which Conroy refused to allow NBN Co chief executive, Mike Quigley, to answer questions about Quigley’s relationship with his board.

That follows several reports (which the Coalition says were supported by its own NBN Co sources) that NBN Co’s chairman, Siobhan McKenna, had imposed greater accountability on NBN Co management and, more particularly, that after being appointed chairman in March, that she had canvassed other board members over their views of Quigley and whether they would support his removal as chief executive.

She was also reported to have instructed Quigley not to meet with Conroy unless she was also present, although Conroy has denied that.

Quigley is close to Conroy and, as the founding chief executive of NBN Co and its first employee, is understandably passionate to the point where the Coalition, and perhaps McKenna, believes he has politicised the role and the organisation.

It is regarded as a certainty that if the Coalition prevails in September one of its first acts will be to remove him as chief executive – Turnbull has said he was the wrong choice for the role of overseeing one of the most ambitious network builds ever undertaken.

McKenna is clearly concerned that a change of government will see NBN Co gutted as the Coalition moves to stock its board and management with people it believes will be committed to implementing its NBN policy and who have had hands-on experience in building complex telecommunications networks. The names of a number of prospective new board members and senior managers have already been canvassed.

She also appears, with reason, to be very unhappy about the progress of the NBN to date, with NBN Co falling dramatically short of its initial targets in its rollout and being forced to continually revise down those targets.

The poor execution of the rollout and the intensity of the debates around the NBN have already seen a majority of the original board turned over and an extremely high level of turnover of senior executives.

McKenna has said that the most recent revision to the rollout targets, which occurred even as she became chairman, had prompted her to take a much tougher approach to management and to address a perceived lack of accountability among senior management.

Whatever McKenna might want to do, however, it is apparent that the NBN Co board and management have no real autonomy – Conroy calls the shots – which places her in the invidious position of being unable to re-position NBN Co or replace her chief exeuctive to try to shift NBN Co into a more politically neutral space ahead of the election.

As a consequence of the political context in which everything to do with the NBN is now framed, she is frustrated in trying to ensure, as chairman, that NBN Co is delivering value for the massive amount of taxpayer dollars now committed to the NBN.

The Conroy factor and the way it has impacted the governance of NBN Co and politicised the organisation makes it even more probable that the board and much of the remaining senior management will be displaced if the Coalition forms the government in September and pursues its very different and lower-cost version of the NBN, despite McKenna’s 11th-hour efforts to distance the organisation from the politics.