Government report slams ACCC's NBN advice

In the latest of the Coalition government's six inquiries into the former Labor government's National Broadband Network (NBN) has confirmed the Coalition's criticism of the planning process around the NBN and Labor's decision to roll out fibre to the premises to 93 percent of the population.

Since coming to government in September last year, Communications Minister Malcolm Turnbull has launched approximately six inquiries into the NBN and broadband in Australia. The latest report, tabled in Parliament yesterday, was conducted by former Telstra corporate affairs head Bill Scales and examined the public policy process between April 2008 when the former Labor government issued a request for proposals for the NBN up to May 2010 when the NBN implementation study was released.

The report (PDF) breaks down NBN planning into two stages: NBN Mk I, and NBN Mk II.

The first was the fibre-to-the-node NBN policy Labor took to the 2007 election, and subsequently held a tender process for after coming to government. Scales found that this tender process was conducted in the traditional way with a panel of experts evaluating various proposals for value for money.

The report claims that Telstra's original 12-page proposal for the FttN project in 2008, which was part of the reason the company was excluded from the original tender process, was not the full proposal from the incumbent, with a much larger and detailed response prepared.

Although Scales admits that Telstra's exclusion from the tender process was legitimate, it "effectively and practically derailed" the entire tender process, he said.

Scales said it is unclear whether Telstra was deliberately attempting to derail the process or whether it was a simple administrative error by the telco in not submitting a fully-compliant proposal.

The NBN Mk II project was developed in the context of a completely broken down relationship between the government and Telstra under former CEO Sol Trujillo, before current CEO David Thodey assumed the role in 2009, and the company became much more cooperative with the government.

Scales was critical of the Australian Competition and Consumer Commission (ACCC) "overstepping its authority" in telling the panel of experts that fibre to the node "was not a stepping stone" to fibre to the premises.

He said that the ACCC's evidence to the committee was never fully tested by the committee, and ultimately resulted in the panel advising the government to go to full FttP in 2009.

NBN Mk II's planning process, as a result, Scales said was "rushed, chaotic, and inadequate" with 11 weeks of consideration in 2009 before the new NBN Co company was officially established in April 2009. Contrary to the popular myth that former Communications Minister Stephen Conroy and former Prime Minister Kevin Rudd established the project on the back of a coaster on a domestic air flight.

The full Cabinet was not involved in the planning of the NBN, according to the documents, with the policy developed by Rudd, former Prime Minister Julia Gillard, former Treasurer Wayne Swan, and former finance minister Lindsay Tanner. The full Cabinet was not consulted on the NBN Mk II policy until April 7, 2009, on the date that the policy was announced to the public, according to the report.

Scales said NBN Co was a start-up company that was not fit for purpose, and only a well-established large telecommunications company would have been able to take on the task of rolling out fibre to the premises to 93 percent of the population.

Scales recommended that all future large infrastructure projects be subject to a full independent analysis by the Productivity Commission or Infrastructure Australia, and departments should ensure they have expert advice before pursuing such large projects.