The Coalition's NBN road map

Malcolm Turnbull is sticking with his targets when it comes to the Coalition's expectations of the NBN. Surprisingly, the message is relatively good news for supporters of the troubled project.

Malcolm Turnbull is no Penny Wong.

The Rudd and Gillard Governments’ minister for finance was legendary for staying on message regardless of the questions put to her – a dream for staffers, speech writers and public servants.

On his first public outing as minister in Sydney this week, Malcolm Turnbull tried valiantly to stay on message as he released the government’s expectations of the National Broadband Network. Surprisingly, the message was relatively good news for supporters of the troubled project.

Since being elected the government’s axe has fallen swiftly on unfortunate programs that offended the Liberal Party’s sensibilities, policies or ideology and many expected a similar fate would befall NBN Co and its directors.

Praising the board

Instead, a surprisingly relaxed and conciliatory Malcolm Turnbull offered an olive branch to NBN Co’s beleaguered board and management.

“The government did request the directors to offer their resignations,” said Turnbull. “That request should not be regarded as any criticism of any of the directors, least of all of its chairman Siobhan McKenna who has conducted herself in a very difficult job in testing circumstances, or indeed of its chief executive Mike Quigley.”

So it turns out the board’s much criticised engagement of political lobbyists was either totally unnecessary or a masterstroke in saving one’s corporate neck.

While it’s unlikely many of the current NBN Co directors will remain on the board next week regardless of the minister’s generous words, Turnbull is focusing on meeting the government’s commitment to delivering a NBN by 2019.

One major obstacle that has slowed the rollout was the previous government’s insistence on full fibre connections to multi dwelling unit premises – apartment blocks, business parks and office towers – which added complexity and cost to the NBN.

In being “technology agnostic” Turnbull has built in a level of flexibility into the project that the previous government’s scheme lacked and should ensure the ‘zero rated premises’ which can’t be connected under the current program will get a service far sooner than otherwise planned.

For smaller regional towns Turnbull’s plan offers VDSL broadband into areas not currently in the fibre footprint which may see more regional Australians get high speed connections through their existing copper cables.

Renegotiating Telstra

Those regional areas scheduled to receive wireless NBN connections were going to keep their copper connection, so providing broadband to these communities shouldn’t be a massive issue in renegotiating access with Telstra.

However, most of the NBN network calls for the old wiring to be removed. Retaining it constitutes a major scope change to the $11 billion dollar access deal negotiated with Telstra. David Thodey reiterated to shareholders earlier this week that the telco will not be disadvantaged by any renegotiations.

Another two years of negotiation with Telstra over a revised NBN deal – along with the regulatory complications which still remain unresolved in the current deal – would threaten the government’s commitment to deliver their broadband network by 2019.

Finding a new board and management

The success of renegotiating with Telstra and the regulator is going to rely heavily on both the board and senior management’s skills, with Minister Turnbull at pains to emphasise 'due process' in appointing directors with the right experience.

A problem in recruiting directors is the chicken and egg dilemma imposed by the government’s sixty day operational review. Turnbull has stated the review cannot start until the new board members take their positions, however, it would be a brave director who accepted a seat while the project’s scope and timelines are still uncertain.

The sixty day review also causes another problem in recruiting a new CEO and management team. It’s highly unlikely that any competent and qualified individual would be prepared to head the company while the scope of the project remains uncertain.

Clash of the audits

Complicating both the executive searches is the plethora of audits.  As well as three direct reviews of the scheme, the Department of Communications is examining the quality and availability of broadband across Australia and the government is also setting up a committee of audit to examine all of government spending.

The Department of Communications report may well identify priority areas overlooked by NBN Co’s current rollout program. This in turn will affect the company’s rollout schedule and may again change the scope of work.

More changes to the NBN’s scope of work will further complicate negotiations with Telstra and make it harder for the government and new management to get a firm idea of the project’s final costs and completion date.

Another factor for the NBN is the whole of government Commission of Audit promised by Tony Abbott. Should the auditors not share Turnbull’s or NBN Co’s view about ongoing funding requirements for the project, we may see a ‘battle royale’ in cabinet over capital allocations ahead of next May’s budget statement.

Where is the rollout?

In the meantime, the rollout goes on in areas where construction contracts have already been let.

Amazingly at the time of writing neither NBN Co nor the minister's office were able to confirm that the rollout maps published by the company reflect the state of construction contracts.

That areas marked to receive the NBN within a year haven’t had construction contracts issued indicates just how poorly managed this project has been and casts serious doubt on the reliability of NBN Co’s internal and external communications.

At the media conference, Turnbull did have sly dig at the standard of information coming out of NBN Co. “While it’s always good to get good news, I want all the news,” the minister said.

That news may not be good as the minister would like as the project’s new leadership grapples with various audits, understanding the state of the project and getting the entire venture back on track to meet the government’s 2019 deadline.

While he may never be as on message as Penny Wong, Malcolm Turnbull will have to make sure the NBN Co’s board and management are under no illusion about the government’s objectives.

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