NBN Co's last hurrah

Labor’s ambitious NBN vision looks to be on its last legs but that hasn't stopped NBN Co from carrying on with its business. The Coalition isn't going to like the new Transfield deal but then again it has bigger fish to fry right now.

Labor’s ambitious NBN vision looks to be on its last legs and with the Gillard government hell-bent on ripping itself to shreds, it looks like the Coalition’s ‘good enough’ approach will just have to do for now.

However, that hasn’t stopped NBN Co from pushing on with the rollout and lock in fresh contracts. Renewing the construction contract (link) with Transfield Services is a gutsy move by NBN Co, which must be getting mighty sick of being the Coalition’s whipping boy.

Transfield Services has been awarded a two-year contract extension worth up to $300 million and a brand new $66 million contract to connect fibre cables to the outsides of homes in Victoria.

NBN Co’s largesse is good news for Transfield, whose shares have been on a downward spiral since its profit downgrade in May, and should put a smile on Mike Quigley’s face. The full fibre dream may be dead (for now) but here’s NBN Co doing exactly what it’s been mandated to do, keep building the Fibre to the Premises (FTTP) until the Coalition pulls the plug.

It’s probably not going to help NBN Co hit its June targets but it should sufficiently rile up the Coalition, which is not keen to see any new major contracts signed.

The new contracts with Transfield will no doubt provide the Coalition another opportunity to heap opprobrium on NBN Co management, especially after the Joint Committee on the National Broadband Network asked NBN Co prepare itself for a change of government following the federal election. However, it also adds to the narrative that shadow communications minister Malcolm Turnbull has been so fond of peddling:  the mismanagement of the NBN rollout, under the auspices of Quigley.

Slowly but surely, the Coalition is laying the groundwork for wholesale changes to the board and Turnbull could well highlight the latest Transfield deal as another sign of NBN Co’s, and Quigley’s, intransigence.

The list of potential successors to Mike Quigley is growing. Unsurprisingly, it mainly consists of current and former Telstra executives. The AFR reports (link) that Telstra executive director Greg Adcock, who is in charge of its internal NBN division, and Telstra’s wholesale boss, Stuart Lee, could be in the running. Meanwhile, former Telstra and Optus CEO, Ziggy Switkowski, has been approached to take a seat on NBN Co’s board as a director. Shadow communications minister Malcolm Turnbull has bemoaned the lack of telco experience on the NBN Co board and it’s a perceived deficiency that he is evidently keen to fix.

Another notable name bandied around is that of Patrick Flannigan, NBN Co’s original head of construction, who’s unexpected departure in 2011 raised more than a few eyebrows at the time.

Flannigan, who was also the founding managing director and CEO of Service Stream before joining NBN Co, left just days after negotiations between NBN Co and some 14 construction firms about the construction came to an unceremonious end. After five months of talks NBN Co indefinitely suspended its network construction tender, citing that the companies had not been able to provide “acceptable” terms and prices.

Given the continued construction woes between then and now, Flannigan’s departure seems almost prophetic. Did Flannigan see this coming? Was his departure from NBN Co voluntary or forced? These are pertinent questions that go to the heart of why rolling out the NBN has caused NBN Co so many headaches. NBN Co and Quigley shouldn’t cop all the blame for the delays but the acrimonious start to the construction phase, characterised by the tender process, always bode ill for the project.

It will be interesting to see if Turnbull can actually entice Flannigan to return, more importantly whether Flannigan would be willing to put on that construction hat again. There is no doubt he has the chops for the job but it could be a case of once bitten twice shy.

The important thing to remember is that the prospect of Coalition’s NBN may now seem locked in stone but that doesn’t necessarily mean that a rejigged NBN Co will be any more successful in rolling out its network efficiently. The change of methodology helps but doesn’t guarantee success. The construction element of this project isn’t solely tied to technology – as the asbestos scenario has highlighted – and keeping the construction companies in line and accountable will need strong hands in the new look NBN Co.

The Coalition’s strategy to frame the NBN debate as a fibre versus copper issue won’t hold much appeal post-election. What will be far more important is convincing them that they are not going to end with an inferior network that ends up costing almost as much as the Labor NBN.