If Malcolm Turnbull needed any justification for the dramatic action he took this week when he demanded the resignations of NBN Co’s directors, it is the belated disclosure that, yet again, the rollout of the national broadband network is falling well short of already heavily-revised down targets.
Turnbull said on Tuesday that NBN Co was likely to meet only about half its target for premises passed this financial year. The target of 729,000 premises passed by June 30 next year compares with NBN Co’s original target for June 30 this year of 1.7 million premises passed.
It is worth noting that a new corporate plan was supposed to have been handed to the former Labor government back in May, but has never emerged. Turnbull's predecessor, Anthony Albanese, has claimed it was in draft form and therefore wasn’t able to be released publicly. It was always obvious why that plan remained an unreleased draft in the lead up to the election.
While Turnbull was almost complimentary about the NBN Co board, pointing the finger at the underlying policy/thought bubble the board was originally handed by Kevin Rudd and Stephen Conroy rather than at the board members themselves, the continuing inability of NBN Co to meet targets that have been continuously lowered made it inevitable there would need to be sweeping changes to the board.
Turnbull confirmed that he had asked for the resignation of the board members and had received letters of resignation from all but one of the directors, speculated to be former investment banker Brad Orgill. He has, however, yet to accept them. The resignations give Turnbull the option and the flexibility to remake the board, with suggestions that he might retain at least two of the current directors.
He said at his press conference that the composition of the new board would be determined at the federal government’s next cabinet meeting. That meeting is expected to confirm former Telstra chief executive Ziggy Switkowski as the new executive chairman.
It will also trigger the start of a 60-day strategic review of the NBN, which will be factored into a new NBN Co corporate plan for the period 2014-17 – a plan that will have to include Turnbull’s proposed fibre-to-the-node core to a revised NBN concept that will use a variety of technologies.
The review will look at the cost and time to completion of the current NBN plan and then compare it with the outcomes using a range of different technologies.
The new board will undertake the review and take responsibility (or, in Turnbull’s terms, "ownership") of its outcomes.
It has been made apparent by the problems NBN Co has had in executing the original corporate plan that there wasn’t a sufficient range of relevant experience either within the boardroom or within senior management for such a massive and complex roll-out, particularly relating to the construction of large-scale telecommunications networks. Turnbull will remedy that.
There were some valid reasons for why the NBN rollout missed its original targets, most notably the time it took to negotiate an agreement with Telstra. The subsequent and significant failure to meet heavily revised down targets, however, says something telling about NBN Co’s capabilities.
Despite the radical shift in the nature of his planned rollout, Turnbull has sensibly not directed NBN Co to simply stop work.
In an interim ‘statement of expectations’ given to NBN CO chairman Siobhan McKenna today, Turnbull instructed NBN Co to continue the rollout in areas where construction is already underway or where it is contractually committed to construction.
Apart from not wanting to get embroiled in messy contractual disputes, Turnbull wants to maintain the NBN workforce pending its redeployment to his version of the NBN to avoid another long and costly hiatus.
He also wants NBN Co to continue to deploy the satellite and fixed wireless broadband component of the rollout, albeit taking into account the likely availability of fixed-line technology via VDSL in the process.
He has directed NBN Co to publish information on the rollout and the premises passed; premises passed that can’t receive a service and premises with an active service, on a weekly basis.
It is going to take time, several reviews, a new board and senior management and another inevitably complicated round of negotiations with Telstra before Labor’s mainly fibre-to-the-premises network is displaced by Turnbull’s mainly fibre-to-the-node network.
Turnbull is putting in place the analysis and the structures that will enable the ‘new’ NBN Co to have input into the design of the ‘new’ NBN, take responsibility for it and be held accountable for outcomes that will be routinely transparent. That’s very different and represents far better policy and process than what the current NBN Co board inherited and had to oversee.