NBN faces sweeping changes as Coalition takes the reins
The biggest certainty facing the country's national broadband network is that it will undergo a complete metamorphosis in the next 12 months with a new board, a new management team, a new culture and strategy, new cost structures and a new set of relationships in the telecommunications sector.
Three separate reviews and a forensic audit of NBN Co will be undertaken immediately, which will effectively give the incoming Abbott government a get-out-of-jail-free card to oust the existing board and take the national broadband network in any direction it wants - and it will.
Besides providing political fodder to humiliate the Rudd government, the reviews will look at the NBN's ownership structure and its regulatory protections. This could result in the private sector being invited to take equity to help fund the rollout. It could also precipitate a review of the role of the competition watchdog the Australian Competition and Consumer Commission in administering the current open access regime.
NBN Co has suffered more than its fair share of scandals in the past few years, including massive cost blowouts, timetable delays, board disharmony, asbestos scares and some unhappy contractors who are losing money and want out.
Critics have described the NBN in its current form as "overstaffed", a "bottomless pit of taxpayer funding" and a "quagmire wrapped in a minefield". But its own figures are the most damning. In 2010 the target was for almost 1 million homes and premises to be hooked up. By June 2013 fewer than 175,000 homes and businesses were connected. In simple terms after almost five years and $5 billion later the NBN is only 2 per cent built.
The first change a Coalition government is likely to do is appoint Ziggy Switkowski to take charge of the audit and reviews and negotiations with key vendors. His appointment will be followed by others with a depth of experience in the telecommunications and/or construction sectors. Kerry Schott is likely to be one of the few board members to keep her job.
But the biggest change will be the relationships with retail service providers, ISPs and others as the new government switches from a fibre-to-the-home national broadband network to a cheaper fibre-to-the-node and fibre-to-the-basement network.
This will require a new and published business plan coupled with analysis, which will be used to renegotiate the Telstra/NBN deal to arrange copper access and compensation in the fibre-to-the-node footprint as well as redesigning the rollout. It will also mean holding discussions with Optus and other industry players as well as contractors.
It will make for interesting times for Chinese telecommunications giant Huawei, which was blackballed from tendering for the NBN due to "national security issues". That was the only explanation given at the time by the then Gillard government. Instead, it appointed Alcatel-Lucent as the main broadband technology provider.
Huawei is currently doing the equivalent work on the British version of the NBN, which is a combination of fibre to the home and fibre to the node using a new technology called vectoring, which increases the bandwidth of traditional copper lines. As one former senior telco executive said: "There is plenty of run left in copper." Alcatel-Lucent is also an expert in vectoring, a technology that communications minister-elect Malcolm Turnbull has made clear will be used in its cheaper version of the NBN.
Turnbull has said he will revisit the banning of Huawei if elected to government, which means if Huawei gets the all-clear in terms of national security issues, it could end up with a role in the NBN.
The change from fibre to the home to fibre to the node will have profound implications for Telstra, contractors and other telco players including Optus. But at the end of the day the aim is to have a network that costs less, is finished sooner and is more efficient. The aim is to create a hybrid fibre, copper, wireless and satellite network with components brought together that offers affordable prices and has a configuration similar to that being adopted in other countries.
With so much change, the new government will need to be mindful that the right industry structure emerges. It was a need to change the structure that inspired the creation of the NBN in the first place. This is an area Switkowski will be well versed in given his background as a former chief executive of Telstra.
Turnbull and Switkowski will have their work cut out for them unpicking some of the contracts put in place by their predecessors and making sure the right industry structure, regulation and entity is created. But given the current state of play, it seems they are starting from a low base.
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