Will Turnbull use an NBN Co boardroom coup to manipulate Telstra?

Will Turnbull use an NBN Co boardroom coup to manipulate Telstra?

Summary: It's clear that Malcolm Turnbull wouldn't keep Mike Quigley around for long if he could help it — but would a victorious Coalition dangle NBN Co executive positions to get Telstra to help make FttN's numbers work?

TOPICS: NBN, Government AU

"In truth, I'd rather talk about something other than the NBN this morning," Malcolm Turnbull said at the start of his address to this week's CommsDay Melbourne Congress industry forum.

Malcolm Turnbull speaking at CommsDay 2012
Malcolm Turnbull speaking at CommsDay 2012. (Credit: David Braue/ZDNet)

Who can blame him? When he last spoke (at the 2010 event) Turnbull had just been appointed as shadow communications minister. His speech was full of energy, determined to mount a fierce and effective offense against Labor's NBN, and filled with the near-religious zeal of someone who — outwardly, at least — truly believed he could halt Labor's NBN plans.

It didn't happen, of course — and while he has been extremely successful in keeping the rhetorical NBN debate alive, the actual victories of Turnbull's tenure could be counted on one hand. Hence a more subdued CommsDay speech this year, in which Turnbull had clearly accepted that the NBN, for all its faults, was a reality, and that he would probably only be able to tweak around the edges if the Coalition is appointed.

One of the tweaks that's clearly high on his list is the directorship of NBN Co. Turnbull's antagonism towards NBN Co CEO Mike Quigley has been brewing for some time, typically emerging only during heated Estimates sessions. A while back, Quigley invited Turnbull to a technical tête-à-tête, after which the shadow minister seemed to have changed his tune a bit.

The past week, however, has seen Turnbull tighten his grip on his scythe. His technical and financial arguments at an impasse — because he has refused to even hint at a price tag for his FttN policy, there is no way to move that part of the debate forward — Turnbull's banner headline is now that Mike Quigley is unfit to be running a telco, with his inexperience driving the "gold-plating" of the NBN.

This, he claims, is because Quigley's professional career was spent at Alcatel-Lucent, a supplier of telecoms equipment, rather than an actual operator of telecoms gear (one could point out that Alcatel-Lucent supplies most of the world's largest telcos, but that's an entirely different discussion).

There is much to read from this.

The first is that — Joe Hockey's previous noncommittal statements aside — Quigley's future in a Coalition-led NBN Co would likely be limited.

Whether he would jump or be pushed is not yet clear, but Turnbull would have no interest in maintaining a CEO with whom he has had a historically adversarial relationship. Given the tone that Turnbull has given their relationship in recent weeks, it seems unlikely that Quigley would want to stay either.

If Quigley's departure is a given, the obvious following question is: who will take his place? If you connect the dots, it seems the answer is becoming increasingly clear.

Turnbull's decision to attack Quigley based on his lack of telco operational experience confirms that he would prefer a candidate from an established telco, who has both management and operational experience.

This leaves Telstra and Optus — and that leaves two obvious candidates.

The first is Paul Fletcher, the ex-Optus executive who has already demonstrated his interest in wading into the NBN debate, and would probably relish the opportunity to take over NBN Co. But there's that pesky political career to consider, so he's probably long odds to actually take that position.

That leaves David Thodey — an effective and respected industry leader, who has guided the transformation of our largest telco in very complex times. Few would disagree with the assertion that Thodey has the experience, the people skills, and the technical knowledge to help the NBN turn the very sharp corner around which Turnbull wants to guide it.

Skills aside, Thodey's biggest appeal to Turnbull would come from the simple fact that he comes from Telstra. This is important, because one of the biggest obstacles to Turnbull's plan is the nagging question of how the government can seize control of Telstra's copper loop to deliver its FttN policy.

A leasing arrangement would, no doubt, come at such a great expense that it would blow out the cost of the FttN project far more than Turnbull could afford. Turnbull regularly refers to the copper, and to the HFC networks of Telstra and Optus, as though he owns them and has unfettered access to them — to actually integrate them into the NBN, however, would be commercially complex.

But what if Turnbull offered the leadership of NBN Co as an inducement to get favourable terms from Telstra? Certainly, having a friendly face as the head of NBN Co would help the Coalition's negotiations around ownership of Telstra's copper and HFC networks?

It's entirely possible, though it probably wouldn't be so overt. Perhaps the need to avoid perceived smarminess would rule out Thodey — which would instead qualify one of his senior operational executives, such as Telstra Wholesale Group Managing Director Stuart Lee or COO Brendon Riley.

Whoever ends up as NBN Co CEO, Turnbull would likely proceed to engineer a coup within the company's management board.

We already know that Turnbull doesn't think much of the current members; he took a swipe at nearly every one of them in this week's CommsDay speech, and would seem to have no trouble filling the roles with ex-industry executives who have the operational telco expertise that Turnbull seems to want.

The actual mechanics of this coup won't become apparent until after next year's election, but I'd say that it's now inevitable. Yet, while he may be able to politically decapitate the company, Turnbull will also need to account for the not insignificant disruptions caused by such a major cultural change within NBN Co.

You can't change technical direction overnight, and you can't simply expect employees, who have spent years working on particular projects, to immediately change direction based on political whim.

Any manager in the corporate world knows how hard this is, and in a company of NBN Co's size and scale, the transition would be exhaustive — and exhausting.

Change takes money, effort, and time — and without a major investment in managing the cultural change of a Quigley-free NBN Co, it won't matter one bit what alternative technical strategy Turnbull mandates. Or what political benefits he obtains because of it.

What do you think? Will the Coalition depose Mike Quigley? Would an ex-Telstra appointee help Turnbull overcome the network-ownership problems with his FttN plan? Or would he keep Quigley onboard, to ensure planning continuity and a faster change of direction?

Topics: NBN, Government AU


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Such change is managed in the private sector all the time

    Anything created by legislation can be disassembled even quicker.

    As Quigley's experience is sufficient for CEO there are thousands of equivalently qualified candidates in Oz, millions globally. Few managers I can think of have missed as many performance tarets as NBNCo but I'm sure the could with the appropriate training;-)

    The cheerleading of the CEO and Board made them political, their future tied with the Labor government long ago.

    But what really surprises is that such management criticism isn't leveled before starting a $63+b project only when it is proposed to end it. Next they'll be demanding a cost benefit analysis;-)
    Richard Flude
    • Welcome Back Richard FUD

      Love the way you always manage to excel at & combining science fiction with fantasy.
    • HMMM

      Richard you wouldn't be the Australians pet economic Guru moonlighting would you?, if so found your article telling us the base NBN plan would retail at $200/month most telling.
      Abel Adamski
  • Hello Mr Richard FUD

    Nice to hear from you again Richard, and I see with your usual FUD and numbers pulled out from where the sun don't shine.

    Please back up and let us know where you pulled $63+b from this time? Last time I looked the black on white figure were still well under $40b.

    Love your work though - you always manage to give me a good laugh whenever the NBN is discussed.
    • If he follows his usual modus

      It'll be Joes "eleventy hundred billion" next...
      • Now now

        My fav of our friend is, when he tells us about the great comms (or was it IT, he gets mixed up...) achievements he has personally made, when we are discussing comms.

        Then when we discuss financials he tells us he's also a Master of Commerce

        ...and when it comes to business management he combines the lot and is a CIO.

        But when you ask, well as you are making these claims and have nothing to hide, show us what you have done... he disappears then reappears, oh, like here :/
        • I would have thought he'd be sick of having his ass handed to him on plate daily by now but apparently not, seems the anti-NBN zealots really are suckers for punishment... guess that explains why they are in favor of Turnbulls FttN patchwork plan too :-(
          Hubert Cumberdale
  • Get real

    Who else but his mates from Opticomm.

    However, re his gold plating comment

    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
  • Shareholders

    Telstra is a substantial listed company, the shareholders interests come first.
    Any deal would have to mean many more dollars and or ACCC wexemptions or other favours that would benefit them would have to be part of the deal.
    Considering the Coalitions fairy tale obsession with "competition" and having the private sector involved (wonder what the contractors are ) would lill the NBN's ability to make the required return, that would mean all on the taxpayer including any more money or deals thrown at Telstra.
    Malcolm is coming off as just another born to rule Liberal throwing another Hissy Fit because he can't browbeat Quigley.

    Personally no way I would want to be the one Malcolm gets to take over from Quigley no matter how the coalition lie, manipulate and deceive to paint Quigley, the Board and the team as incompetent and having failed in their duty.
    They will be personally judged on the result within the industry and internationally on what they deliver in comparison to that which has been done and planned, plus if it does end up on the Taxapyer Bill due to ideological idiocy, they will wear the responsibility for that
    Abel Adamski
  • The damage the coalition is already acheiving

    Note NBN is as the rollout ramps up needing more staff, they have even released an introductory what it is like to work at the NBN video presentation.
    I can understand why the difficulty in recruiting, once the coalition is in MT is replaced and Abbot and Hockey get their way, the job is either gone or delivering crap to Australia, who wants that.
    Who saw the Hockey tantrum on Ch9 on election night, ranting about destroying the government and ensuring they can' function, why so Libs can get in power, nothing about whyt they would be better or what they could achieve, no concern about Australia, just about POWER for the Libs, Abbot, Bishop and the rest have followed in the same vein.
    Hockey lost my respect for ever after that insane rant, and the Channel 9 commentators were fully agreeing and cheering him on, so Kharma for Channel 9

    So expect the NBN to be effectively destroyed, Abbot promised the base service on the NBN would be $200/Month and he will make sure it happens by bringing the private sector in and screwing over Rural Australiain
    Abel Adamski
  • David Brauer is playing silly

    What qualifications do you have to make allegations against Mr Turnbull. You are a shill. It is disgusting you keep venting your spleen week after week.

    You were a troll in 1980 and now you are a troll.
    Van Der