New NBN Co executive chair Dr Ziggy Switkowski has said he believes that Telstra's copper network is robust and has been well-maintained for decades, and the executive has defended his decision to appoint a number of the incumbent's former executive team to NBN Co's own executive ranks and board.
Switkowski, who was the CEO of Telstra at the turn of the century, was the first appointment to the new-look NBN Co by Communications Minister Malcolm Turnbull after the September election, and in his first appearance at a Senate Estimates hearing last night, he defended the quality of the copper network owned by his former company which NBN Co will be required to use if NBN Co is to begin rolling out fibre to the node instead of fibre to the premises.
Switkowski said that prior to the strategic review, NBN Co had not undertaken an assessment of where the copper network would not be suitable for fibre to the node.
"It's a question in front of us. We have most recently started a process of working with Telstra on a pilot approach which will give us more information about fibre to the node on a copper network, how to scale it, and may well reveal if there are unanticipated issues with the network," he said.
But he said he believed the network to be well maintained.
"The copper network has been in place for a long time. It's constantly being maintained, remediated, upgraded," he said.
"Clearly I don't have recent Telstra information except anecdotal material, and my feeling is the network in 2013, the fault rate might be higher than it was in the time I was at Telstra, but perhaps not materially higher and hard to disengage from weather patterns. Fault rates in the early part of the last decade were lower because it was drier. When it gets wetter, that exposes the copper to some extent.
"As best as I can tell, the copper network continues to perform robustly and without knowing the number, Telstra must have millions of broadband customers using ADSL on copper delivering speeds of up to 10Mbps."
Switkowski said that the concerns expressed about the network not being up to being the basis for a FttN NBN were "misinformed".
Switkowski's comments on the copper network came just a day after Telstra's head of wholesale Stuart Lee defended the quality of the network, stating it was not "ageing" and mass service disruptions were on the rise to due an increase in the frequency of extreme weather events.
Following Switkowski's appointment to NBN Co, he has also appointed a number of other Telstra executives to the company as part of the restructure in preparation of overhauling the project under the new government. This has been criticised by the Labor opposition as "jobs for the boys", but Switkowski said last night that it is inevitable ex-Telstra executives would fill NBN Co's ranks.
"In this country, Telstra has employed, and continues to employ probably more than half of all of the telecom-trained people," he said.
"It seems to me, if you're going to build a new generation infrastructure, that the skills that you need in that environment — and it is expecially so in a fibre to the network (sic) environment — are the sort of skills Telstra trains its executives in. Not just about the arcane nature of telecoms but the nature of working with the construction industry and also insights into how to make a network work, if it depends in part on Telstra elements."
He also criticised the make up of the executive team under former CEO Mike Quigley for lacking such experience.
"In Mike Quigley's team of nine or ten people, there was one person with any experience of building a fixed network in Australia. I would say that was underdone," he said.
"If you look at the top 100 executives, I think there were 15 who had substantial Telstra experience, and 16 who had a substantial Optus or Vodafone experience.
"I think it shows in the general level of inexperience in dealing with the players in the telecoms industry and dealing with Telstra."
The make up of the new executive team would ensure that the company understands how to use Telstra's copper network, he said, and added that the recent board appointments of former Telstra executive Justin Milne, ex-NBN Co construction head Patrick Flannigan and Internode founder Simon Hackett gave the board the experience it sorely needed.
"I can tell you from the two board meetings we've had and subsequent meetings of directors, the nature of the conversation, the level of direct experience [...] are so much richer than possibly could have been with a board that did not come from the industry," he said.
When Labor senator Kate Lundy pointed out that recently shafted NBN Co chief operating officer Ralph Steffens had experience in telecommunications, Switkowski said that Steffens "had no Australian experience".
Gigabit speeds insignificant?
In response to a question from Greens communications spokesperson Scott Ludlam on whether a fibre to the node network would ever be able to deliver gigabit speeds, Switkowski mentioned the trials of G.fast and questioned the need for those higher speeds.
"Some copper-based technologies being demonstrated are getting very close to 1Gbps," he said.
"I agree it is impressive, and has yet to be built out to scale but on the other hand I'd ask the question, what is significant about 1Gbps?"
"The same thing that was significant about upgrading to broadband 10 years ago," Ludlam replied. "The fact that I'm really glad I'm not stuck on a dial-up service.
"I fear that's what we're going to be building over the next five years; the equivalent of stranding 70 or 80 percent of the population on dial-up."
Switkowski said a number of assumptions had to be "stretched" to explain how a household would use all 100Mbps speeds.
"We've got to be very careful about making decisions today that have enormous cost, and enormous execution challenges because we think that in 10 years' time there will be applications that require just that sort of delivery," he said.
Many of the questions put to Switkowski during this three-hour grilling were left unanswered, with Switkowski stating that much of the policy aspects of the future of the NBN project will arise from the outcome of the 60-day strategic review currently being undertaken by NBN Co.
Switkowski said that the government had given NBN Co the hard deadline of having the report due in the first week of December, and he said that NBN Co was currently on target to meeting this deadline.