From the moment, just over a fortnight ago, that Kevin Rudd wrested the leadership of the Labor Party and the prime ministership from Julia Gillard and Stephen Conroy sent himself to the backbench Mike Quigley would have known his days as chief executive of NBN Co were numbered. Today he announced his retirement.
The fate of Quigley, the founding chief executive of NBN Co, was probably decided regardless of the outcome of the federal election because Conroy was his patron and protector.
As soon as Siobhan McKenna replaced Harrison Young as chairman of NBN Co in March it became evident that Quigley’s continuing tenure of the chief executive role was in question. McKenna immediately began canvassing other NBN Co directors about their views on Quigley and is said to have hired an executive search firm to look for a replacement.
She also insisted that she be present at meetings between Conroy and Quigley, who until then had been meeting privately on a near weekly basis.
She would obviously have been concerned about the politicisation of NBN Co in the lead-up to an election that the Opposition was then heavily favoured to win and also about the potential undermining of proper governance of an entity that is supposed to act at arms-length from the government and under the direction of its board.
While Conroy was the minister for broadband Quigley was safe. Apart from the close relationship they had developed, the political implications of the chief executive overseeing the troubled project being dumped would have been very damaging for both Conroy personally and the government more broadly – a confirmation that the $44 billion-plus project was in trouble.
Once Conroy left the scene McKenna, the managing director of Lachlan Murdoch’s Illyria Pty Ltd, would have had a freer reign. If Labor were to lose the election, of course, Malcolm Turnbull had made it very clear that Quigley would be replaced. Either way there was a very large question-mark over his retention of the role – it was widely seen within the industry and by those close to NBN Co that his imminent departure was inevitable and, indeed, given the issues with the NBN, that he would have been forced out some time ago if not for Conroy.
Ever since its rather peculiar birth in 2009 when Rudd and Conroy were on a plane and, about to announce the embarrassing failure of their "request for tender" process for the building of a fibre-to-the-node broadband network, instead dreamed up the massively more expensive fibre-to-the-premises NBN, the NBN has been a highly politicised project.
It was controversial, not only because it was conceived and committed to without any meaningful analysis, nor just because of its cost – at least $44 billion to build and probably a lot more – but also because of the bovver boy tactics Conroy used to bludgeon and threaten Telstra into co-operating.
While Quigley, intelligent and personable and generally described as a "decent" man, has been an understandably passionate defender of the NBN – he was NBN Co’s first employee and the architect of the organisation and the network’s design – the rollout has been plagued by problems, delays and targets for premises passed by the all-fibre network that have been continuously and badly missed and heavily revised down.
Only a fraction of the premises that were supposed to be connected by now under its original corporate plan have been connected. The original plan was to have the network rolled out past 1.7 million premises by now but less than a third of the target has been achieved – and about 60 per cent of that by satellite and wireless rather than fibre – and only 70,000 premises connected.
The big criticism of NBN Co and Quigley has been that slow progress of the rollout, with Turnbull targeting the lack of experience within NBN Co in actually building telecommunications networks. Quigley was a former chief executive of equipment vendor, Alcatel. As the rollout has stuttered there has been heavy turnover of executives within the company.
Quigley, who will stay on until his replacement has been found, will be remembered as the founder of NBN Co and for his achievements in negotiating the extraordinarily complex agreement with Telstra that will, regardless of the election outcome, result in its structural separation and the creation of a wholesale-only national broadband network.
It is unlikely, however, that the original vision of an all-fibre national network, built by 2021 with a construction costs of about $44 billion and taxpayer-provided equity of $37.4 billion will be realised.
The rollout is the best part of a year behind schedule, the costs are blowing out and the Labor government, struggling to contain its budget deficits, has cut its budget allocation for this financial year quite substantially.
If the Coalition were to win the election, it won’t have to search for reasons to abandon the Rudd-Conroy vision for its more modest plan which should deliver a much cheaper network far earlier. If Labor were returned, it might be forced by the problems with the rollout and its own larger fiscal challenges to reconsider some aspects of its policy to lower the cost and accelerate the build.
Alan Kohler will be debating Malcolm Turnbull on Coalition NBN policy at a business lunch at the Sheraton Wentworth in Sydney on August 1. To book a ticket click here.