NBN executive inexperience led to 'gold-plating': Turnbull

NBN executive inexperience led to 'gold-plating': Turnbull

Summary: Shadow Communications Minister Malcolm Turnbull has accused NBN Co CEO Mike Quigley and other executives in the company of being unsuitable to run the company.

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Shadow Communications Minister Malcolm Turnbull has said that NBN Co CEO Mike Quigley's lack of experience in running a telecommunications company has contributed to the "gold-plating" and excessive spending of the company.

In a keynote speech at the Communications Day Summit in Melbourne this morning, Turnbull said that the National Broadband Network (NBN) would be an important election issue in 2013 for the Coalition. He took aim at the "heroic disregard for facts, evidence, and accuracy" surrounding the reporting of the NBN. He argued that criticism of the comments he made two weeks ago, in regard to Quigley not being qualified to run the company rolling out broadband fibre across Australia, was unjustified.

"Mr Quigley's career was spent at a vendor of networking equipment, where he was extremely successful," he said. "Mr Quigley has not worked for a telecommunications carrier. He hasn't ever been responsible for a network rollout or an operating telecommunications business. Nor, as it happens, have any of the current directors of NBN Co — there, we have five former bankers, two former McKinsey consultants, two former equipment vendors, but no former telecom executives."

Turnbull said that the most recent board appointee, Dr Kerry Schott, was more qualified, having run Sydney Water. But the lack of experience, overall, meant that NBN Co had set unrealistic goals.

"In my view, this has contributed to NBN Co setting, for itself, milestone after unrealistic milestone that it has abjectly failed to achieve," he said. "It has contributed to NBN Co's culture of gold-plating and excessive spending, because if capital is not constrained and those supervising the enterprise are not directly familiar with its task, the safest option is to choose the most costly option. And the easiest way to deal with mounting pressure and slipping schedules is to throw money at them."

Turnbull said that the Coalition's policy for the NBN will be, in large part, dictated by the contracts that NBN Co has already been locked in to. The Coalition will keep the fixed-wireless and satellite services for this reason.

He also added that, if the Coalition wins government, he would hold an inquiry into the management and the governance of NBN Co, and look at the contract commitments that have been made by it.

"We do not know what contractual commitments we will inherit, or how these may be varied to suit a changed design. And given Senator [Stephen] Conroy's extravagant rhetoric about 'locking in' Labor's NBN, we have every reason to be cautious on this front — although, it is our very strong expectation that the Department of Finance, which is a 50 percent shareholder in NBN Co, will have properly and comprehensively protected the interests of Australian taxpayers and Australian democracy in this matter."

He said that he cannot be precise about how much a Coalition government would pay Telstra to access the copper for a fibre-to-the-node (FttN) approach, instead of the current fibre-to-the-premise (FttP) approach, because he cannot negotiate with Telstra while in opposition.

For this reason, Turnbull said that he could not cost his policy today.

"If we were in government and working from a clean sheet, we could very easily cost our policy down to the last cent — much more accurately than Senator Conroy has been able to cost his. But we are not," he said. "And given so much of the uncertainty we face is in the hands of the [current] government and NBN Co, I am not going to claim otherwise."

"The one thing we do know, and all you know here, is that FttN is substantially faster and cheaper to deploy than FttP. That is why so many telcos around the world are deploying it."

He predicted that if Labor returns to government after the 2013 election, he "wouldn't be surprised" if taxes were raised for the telecommunications industry, once Labor realises the true cost of the network.

"They may try to raise taxes on other parts of the telecommunications industry to pay for it," he said.

Topics: NBN, Government, Government AU

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

15 comments
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  • What happened?

    I believe it wasn't too long ago that Mr Turnbull was saying that he had his broadband policy fully costed and ready to go. Since then, he's said that he can't have it fully costed. Which is true?

    Oh, and I'd rather the NBN be in the hands of Mr Quigley.
    Psychaotix
  • Don't feed the trolls!

    I guess we have to continue with the current system, where a proven executive directs the skills of people who have more knoledge about their specific specialities.

    What would MT do it? Hire back Solomon Trujillo because he has experience running a telecommunication company, and ticking that box is supremely important?

    I could see the same problem though, as Solomon Trujillo hasn't any experience rolling out a wholesale FTTH network.

    Why does MT say the NBN could cost 50 or 100 billion based on the "supposed" opinions of a few engineers who also have not run a telecomunication company?
    Paul Krueger
  • Strange, the article reads like my post responding

    the first ZDNet article.

    Deep breaths people, finally a sound on topic article.

    The cost of the NBNCo satellite investment alone is frightening, an sector littered with corpses of failed companies. I'm sure this time will be different;-)
    Richard Flude
    • Innuendo

      Richard,

      If your not running it, I am sure it will ;-)
      rtfmoz
    • Umm

      Of course it will be different... the profitable urban is cross-subsidising the unprofitable rural = Aussie ubiquity.

      Plus fair, rather than overtly profitable ROI = affordable (ubiquitous) access.

      Explaining why private enterprise aren't interested unless they receive wads of non refundable taxpayer funds (gifts), to build and own our national comms network. They simply want the profitable areas, which is why the government "have" to do it.

      The NBN addresses all of these concerns. Funded by debt not income taxes, will be profitable in the long run and it also takes the reins from Telstra.

      It's a win/win/win and it's quite simple to understand really... if one can just put aside their own wallets and political brainwashing and see the NBN for what it is, not as a threat or because the leftists (your word) are building it...

      But alas :(
      RS-ef540
  • So that's how it is then

    "You can't see our costings, because they're not going to be accurate.....but it WILL be cheaper, we promise!"

    Sorry Mr Turnbull, that chicken don't fly. Even an ESTIMATE would be better than vague promises. No costings? No vote from me.
    seven_tech
    • Any Old Copper?

      Good work MT. First you sell the copper then you have to buy it back having first created a seller's market. Only then to start the long neglected, expensive maintenance & eventual replacement of all that failing copper to the home with fibre (as per NBN).
      But at least you won't be forced to provide a CBA in advance for this waste of taxpayer's money.
      grump3
  • Just tell us the pre-compo costing of FTTN, Mister Turnbull!

    The compensation element is a red herring in Malcolm Turnbull's bid to build 1990s-style FTTN with a five-year useful life, instead of spending $12 billion to deliver fibre to all premises in practically all towns and cities in the nation.

    I would say that the compo to Telstra for using its last-mile copper will be in the range of $9 billion (i.e. what is would get from the NBN) to $15 billion (i.e. the compo it sought for the copper in 2009).

    Given that the cost for NBNCo to lay universal fibre only accounts for $12 billion of the NBN, any Turnbull construction cost over $3 billion for ugly fan-cooled FTTN cabinets on every residential footpath would be sufficinet to rule out FTTN. In 2009, the cost of FTTN was put at $11 billion plus compensation.

    Little wonder Malcolm Turnbull is grasping at smoke to hide his disastrous costings from scrutiny.
    umbria
  • And another thing ...

    If Malcolm Turnbull promises the electorate he will build FTTN, then Telstra knows he must buy their aged last-mile copper, and that price is no object to avoid breaking his very high profile election promise. Compo will therefore be at the high end of the sliding scale. My guesstimate for Malcolm Turnbull's FTTN to 70% is therefore $20 billion, and the remaining 40% will get wireless and satellite, increasing the cost of the LTE project by around $5 billion.

    This is $25 billion, on-budget, paid for from our taxes. Compare this to the cost-recovered NBN and ask yourself - who will be raising taxes to pay for their policy?

    Seriously, if the coalition takes this croc to the 2013 poll, we will get another hung result, and probably see another minority Labor government held to ransom by cross benches. The coalition must make the NBN, as brilliantly conceived and finally underway after coalition delaying tactics, a bipartisan policy.
    umbria
  • Maths

    OK, I realise 70 plus 40 is not 100! I had written 60% and changed it to 70 just before hitting Submit. It will certainly not be more than 70% FTTN, and those without a high-capacity fixed service will rise from 7% to at least 30% under the more costly Turnbull plan.
    umbria
  • Ironypocracy.

    Malcolm, have you even worked in Telecommunications AT ALL?

    And yet, you're going to be running policy?

    Do you not realise that every single word you say makes you out to be a fool and an hypocrite?

    "Oh NBN doesn't have an ex-phone-company CEO, so therefore an ex-banker turned politician clearly knows more."

    Is this seriously the line you're pushing?

    I hope the balloon that is your ego has a massive sack of weight to hold it down. It might just float away with all the self-applauding hot air you're spewing!
    myne-819b4
    • Telco role

      Malcolm Turnbull was chair of OzEmail for about 5 years (~94-99?), one of the reasons pro-NBN people are willing to give him any credence whatsoever. He actually DOES have experience in the industry.

      If anything though, it makes his statements worse. He should KNOW what he's saying is pure 100% FUD, and that there arent (m)any options better than Quigley. It doesnt actually matter who was in that role, they arent going to tick every box so there would always be something to target them with in a smear campaign like this...
      Gav70
  • Ridiculous

    Most of the misinformation on the NBN side has come Malcolm Turnbull and the Coalition. All he wants is a cut price job to gain votes and yet, he cannot even provide a price! I know who I would rather go with.
    rtfmoz
  • Relativity

    We have an NBN, designed to be ubiquitous and Business capable to the 93%, with all the support infrastructure and systems to make that possible. The FTTH Component costing approx $12Bill.
    We have the Coalitions NPN which is not truly ubiquitous as that depends on the location lottery, not truly business capable from any reasonable percentage of premises.

    The core infrastructure of the NBN, built to be the foundation platform for many decades for business and domestic volumes and providing services up to at this time 1G plus multicasting etc will be overkill for the coalitions pathetic play school cardboard cutout version which will have very limited data volume requirements.
    So from that perspective of a pathetic service not needing that level of core infrastructure he is correct , it would be gold plated overkill.

    It is in fact the first bit of unintentional honesty from MT in relation to the Coalition NBN as to how pathetic their NPN will be
    Abel Adamski
  • Malcolm the liar.

    Malcolm Turnbull is Tony Abbots dog that is all. He is a disgraceful decietful lying dog just like Tony Abbott. Mal and his dog mate Joe have been caught out lying and spreading misinformation on and about the NBN issues, why anyone would listen to anything that comes out of their mouth is absolutely beyond comprehension.

    Malcolm you sir are a dog.

    But forgive my rant and let me just say that i will take the word of Mike Quigley after seeing their predicted costings written down, rather than believe the above mentioned lying indivudual. Who says he has then he hasn't then he can't cost his watered down version of the NBN.

    GENIII
    GENIII