The NBN makeover

While NBN Co's new boss Bill Morrow is wasting little time in stamping his authority, the toxic politics of the NBN continues to bubble under the surface.

NBN Co's recent interim update on the financial health of the project served as the perfect platform for the company's new boss, Bill Morrow, to articulate his position on how the NBN is going to be rolled out. However, Morrow’s prescription to preserving the economic viability of the NBN looks set to give way to the latest round of political bloodletting, with former communications minister Stephen Conroy firmly in the cross hairs.

Before we get to Senator Conroy, here’s a quick recap of what NBN Co’s new chief executive has been up to since coming on board officially.

The former Vodafone Hutchinson Australia boss has wasted little time in stamping his authority on NBN Co. Bill Morrow and Mike Quigley may both have been denizens of the telco world, but they are very different operators.  

Morrow's efforts to insert a commercial spine into the organisation shouldn't come as a surprise. After all, the cut and thrust of the telecom market has been his bread and butter for decades. But the NBN poses a unique challenge and the overall message is morphing into something far more than just keeping TPG Telecom at bay.

Killing the cherry pickers for good

The network needs to get to end users as quickly as possible without NBN Co breaking the bank, and despite the earlier bluster about tackling the TPG Telecom problem head on, one suspects NBN Co is hoping for the cherry picking loophole to be closed for good.

Threatening to blow TPG out of the water by outcompeting it in the multi-dwelling units (MDU) space may have been a well-choreographed exercise in highlighting NBN Co's resolve but Morrow has other weapons in his arsenal.

Foremost among them is the call to impose a levy on TPG, or any other operator for that matter that wants to roll out a competing network in the profitable urban areas. Morrow likens this to the universal service obligation -- a far more palatable term than a tax -- to ensure that private operators hoping to make money in the city will do their bit for the country.

The proposed levy is an attempt to ensure that the cross-subsidy component of the NBN, threatened by TPG's aspirations, now applies to the infrastructure competitor as well. Other options flagged by Morrow include the introduction of a tax subsidy component where taxpayers pay for the difference of the higher cost in the rural areas.

With preserving the NBN business model a key consideration for NBN Co, Morrow has also mooted the  prospect of selling NBN infrastructure, including wireless towers and satellites, to third parties.

The idea is to sell the assets to third-party operators before locking in long-term leases at market rates. It’s a routine telco trick but as Morrow points out to The Australian Financial Review, NBN Co will have to get runs on the board with regards to the rollout before sale and leasebacks come into the picture.

For now, the focus is on making sure that the numbers work in NBN Co’s favour and the regulatory status quo is maintained until the NBN is up and running.

Read NBN Co’s supplementary submission to the panel conducting the cost-benefit analysis of the NBN and examining its future regulatory framework here.

Conroy set to come under fire

The adoption of Coalition’s multi-technology mix was always going to force NBN Co and the retail service providers to retrace old ground, no doubt covered by the Labor government but without the aid of a stated cost-benefit analysis.

Which brings us to Senator Conroy, who is about to a bear the brunt of a backlash from the three Coalition senators in the Senate Select Committee installed to scrutinise the NBN. The Committee, run under the auspices of Senator Conroy, tabled an interim report in March calling for a comprehensive rewrite of the NBN strategic review handed down late last year, citing the numerous faulty assumptions it contains.

According to the report, the review currently on the table is “deeply flawed” and essentially an exercise in undermining the rationale for Labor’s fibre-to-the-premises model.

The report drew immediate condemnation from three Coalition senators in the committee - Zed Seselja, Anne Ruston and Dean Smith – and according to CommsDay, the trio is about to turn up the heat on Senator Conroy.

Their official response to the report slams Conroy’s imputation that NBN Co has deliberately understated the 2013 run rate of the NBN fibre build to make the fibre-to-the-premises rollout look like a thankless task, as well as disputing pretty much everything that the interim report had to say about the viability of the strategic review handed down by NBN Co.

The nitty gritty will become clear once the report is officially out in the open, but needless to say, the emphasis here is to cast aspersions on just who’s fudging the numbers and cooking the books to suit their purpose.

None of this has any real bearing on what Bill Morrow aspires to do with the NBN, but the riposte from the Coalition senators unhappy with Senator Conroy’s assertions further illustrates that the toxic politics of the NBN is never too far from the surface.