NBN Co's ongoing rollout problems have once again been highlighted with iiNet and a couple of smaller telcos opting to refrain from signing NBN Co’s new wholesale broadband agreement.
The NBN Co wholesale broadband agreement provides guidance on NBN Co products and key service terms and conditions including the Customer Service Guarantee (CSG).
iiNet, its subsidiaries and the small telcos have indicated that they are concerned about the possibility that they would be required to pay compensation to customers for late delivery of service, and other problems that were referred to the Telecommunications Industry Ombudsman (TIO) or the Australian Communications and Media Authority (ACMA).
Earlier this year, Telstra was fined $510,000 by the ACMA for failing to meet fixed-line telephone service CSG requirements when providing urban landline customer connections in the 2012-2013 financial year. The CSG requirements provide a safeguard for consumers to ensure unacceptable delays do not occur for connecting a service, fault repairs, service problems and attending appointments with customers.
The potential for NBN retail service providers to be fined for delays outside their control is a concern, especially at a time when the ACMA is finally acting upon and increasing fines for CSG non-compliance.
"Appalling delivery record"
The Australian telecommunications industry has been left for too long to putter along at unacceptable service quality and customer satisfaction levels.
Like a house of cards, NBN Co’s service provision can be affected by delays associated with asbestos remediation (Telstra), construction delays introduced by contractors or regulatory requirements (state or council).
Retail service providers could be subject to CSG related fines when the cause of the delays are buried somewhere in the many external relationships that NBN Co has to manage and some of these are more complex than they appear on the surface.
Failure by the government to purchase infrastructure needed for the NBN from Telstra has introduced cost, maintenance and CSG risks. Asbestos remediation delays in Tasmania have led to a very public argument between the Tasmanian Premier Lara Giddings and the Communications Minister Malcolm Turnbull.
NBN Co’s outsourcing of the network construction means it's dependent on external companies to meet rollout targets.
iiNet’s chief regulatory officer Steve Dalby described NBN Co’s “appalling delivery record” as a major reason why iiNet would not sign up to the NBN Co’s new wholesale broadband agreement.
NBN Co’s relationship with the construction partners has been rocky and this was highlighted when NBN Co took over the Northern Territory rollout after Syntheo’s withdrawal. NBN Co’s construction partners, companies cobbled together by telecommunication industry and construction organisations have demonstrated why NBN Co should have setup an internal construction department and taking direct control of managing the rollout teams and mum and dad contractors doing the NBN installations into premises.
Too many links in the blame game
The current NBN Co construction process has too many links in the chain where delays and mistakes can be introduced. But this is not the only problem. The NBN rollout is proceeding at a glacial pace because the construction companies have no incentive to proceed faster. And they know that NBN Co is unlikely to take over the construction management function because the industry has too much sway with government.
Turnbull would do well to turn his attention to this matter because the construction partners have failed to grasp the need to mobilise a much larger workforce and focus on exceeding targets rather than how to introduce delays and argue for more money.
NBN Co’s failure to purchase the telecommunications infrastructure from Telstra means the construction partners blame Telstra for access and asbestos remediation delays, Telstra blames NBN Co for management failures, poor construction processes and practices and the government is left wondering how it ever got into this mess.
The bottom line is the construction companies are not being fined for failing to meet contracts, have been financially rewarded recently to get them back to work, and Telstra has not been fined nor taken to court for failing to meet maintenance and asbestos remediation targets in the $11 billion NBN Co agreement. Or did NBN Co sign an agreement with Telstra that did not include non-performance penalty clauses?
Repeating a failed formula
At the end of last year, Tasmanians were faced with the ludicrous situation where they could not connect to the NBN when told that the copper network was to be decommissioned because 18 months had passed since the local FSAN became fully operational as required under the NBN Co-Telstra agreement.
Why weren’t Tasmanians told 12 months before the switch-off and reminded with 6 months to go?
The install on demand approach adopted by NBN Co means that this unfortunate scenario will be repeated many times as the NBN is rolled out because the construction partners and the mum and dad installation companies that do the installation into premises cannot handle the spike in installation requests when copper is decommissioned.
A better approach would be for installation into premises to occur before the copper is decommissioned and to reduce the installation requirement NBN Co should be targeting premises that have active copper data connections.
iiNet, its subsidiaries and the minor telcos are right to not sign the new wholesale broadband agreement while the construction mess continues. This is now Turnbull’s problem so he needs to stop arguing with Giddings and put a solution in place quickly. If Turnbull fails to act to fix the construction problems then another item could potentially be added to a burgeoning list of failures as communications minister.
Mark Gregory is a Senior Lecturer in the School of Electrical and Computer Engineering at RMIT University