Skills paradox hits NBN Co, but could Libs do better?

Skills paradox hits NBN Co, but could Libs do better?

Summary: A Coalition NBN would remove much of the construction work associated with the project, but would it cure the project of its skills ails?

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TOPICS: NBN, Government AU
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One of the difficult paradoxes of the recent furore over the shortfalls of the Labor-led NBN Co emerged when the NSW Business Chamber recently reported that it is fielding complaints from contractors over the "extremely poor" rate of pay and the "poor logistics" of many NBN Co subcontracting companies.

This raises many questions, but the most pragmatic among them are clear: How can NBN Co improve the situation now, and how might the Coalition overhaul the terms of its mooted industry engagement to ensure that its fibre-to-the-node (FttN) network can be delivered by the same subcontractors, to tighter budgets, and with all the rhetorical fanfare accompanying its best-case alternative National Broadband Network (NBN) policy.

As to the existing policy, contractors have blamed the shortfall on "piecemeal" contracts that make it hard to justify the costs of sourcing and training new staff. In turn, those staff would logically be reluctant to commit the time and energy to being trained if they can't be guaranteed of a long and profitable engagement with the subcontractor.

That situation, however, is unlikely to change for a number of reasons — not the least because of reports that employee pay is "extremely poor", and that NBN Co has had to step in to fund training in order to ensure that there are enough skilled employees out there to build the NBN.

Direct intervention like this is a bit worrying: It's the equivalent of giving a four-year-old a pair of scissors, stepping back, and then quickly grabbing them after he seems to prefer waving them in the air around his peers than using them to cut out his paper stars. It's not exactly how things are supposed to work, and while you want to let him find his own motivation, you know it's not likely to happen that way.

If Labor — putatively a friend to workers and the unions whose members are building the NBN — cannot deliver the training and staffing outcomes required to complete the project, how in the world will the big business-friendly Coalition do any better?

The government — through NBN Co — could help fix this, of course, by not only tightening its oversight of NBN Co subcontractors, but by offering more appealing commercial terms to contractors. In this particular case, however, "more appealing terms" would probably imply longer contract terms — which would, if contractors' complaints are fair, justify a greater training expenditure.

Yet that sort of behaviour has been explicitly ruled out by Stephen Conroy, who continues to argue that NBN Co is and will continue to maintain a commercially responsible position. That position is clear: NBN Co will not stuff the pre-election pipeline with longer-term contracts than normal, just to ensure the project's longevity after any possible Coalition victory.

Similarly, the company cannot not extend the duration of its contracts just to convince its own subcontractors that they should invest in adequate training and salaries to fulfil their contracts; they really should have thought of all that before they signed the contracts, committing themselves in no uncertain terms to taking part in a massive infrastructure-building project.

These are professional subcontractors, and the whole reason they've been brought in was so that NBN Co wouldn't have to manage the project with its own workers; in this light, NBN Co intervention is at cross purposes to its goals — and must be recognised as such by the company's detractors.

Whomever Malcolm Turnbull installs as NBN Co CEO after the increasingly-likely ousting of Mike Quigley, will inherit a raft of troubles ... This will most definitely involve tough conversations with existing subcontractors, and an expectation that NBN Co become much tougher with those subsequently engaged to deliver the Coalition's FttN policy.

All of this difficulty raises another, very significant question: If Labor — putatively a friend to workers and the unions whose members are building the NBN — cannot deliver the training and staffing outcomes required to complete the project, how in the world will the big business-friendly Coalition do any better?

Whomever Malcolm Turnbull installs as NBN Co CEO after the increasingly-likely ousting of Mike Quigley, will inherit a raft of troubles as he or she works to root out inefficiency, waste, and rorting in order to turn around the Good Shop NBN. This will most definitely involve some tough conversations with existing subcontractor, and an expectation that NBN Co become much tougher with those subsequently engaged to deliver the Coalition's FttN policy.

However, FttN requires yet another set of skills to that of fibre to the premises (FttP), which will require yet more fundamental adjustments amongst industry participants — and involve a training lead time that Turnbull does not seem to have factored into his claims of a faster FttN delivery.

Indeed, a shift in broadband policy would leave existing subcontractors with their own catch-22: how can they invest heavily in FttP skills to complete their existing obligations with the knowledge that those skills will become obsolete once the existing contracts are complete, and they then find themselves tendering for FttN work instead?

Turnbull may be planning to resolve this issue by simply engaging Telstra's existing field workers to build his NBN — he does seem to be taking Telstra completely for granted as he spruiks his anti-NBN project — but something tells me they might prove to be busier with other projects than he now thinks.

If this proves to be the case, the yawning skills gap could prove to be as much of a bugbear for the Coalition's NBN as it has been for Labor's — and it could quickly blow out Turnbull's projected completion dates as the Coalition's incredibly ambitious and optimistic delivery timeframes meet the ponderous reality of Australia's labour market.

What do you think? Will NBN Co intervention get subbies' training investments back on track? Will a change to FttN engender a training disaster? And can the Coalition stimulate the necessary training investments where Labor has failed?

Topics: NBN, Government AU

About

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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Talkback

22 comments
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  • Indeed. Seems the coalition clowns plan is already looking very flaky. The big problem is that Turnbull is trying to sell Abbotts faudband plan based on the assumption that they can do it faster. He must be extremely optimistic or naive to think it will be a smooth ride especially with so many obstacles to overcome. He really shouldn't be making promises he cant keep and we certainly shouldn't be fooled by any it. It's clear that the coalition clowns faudband plan will not only come up short on speed but also wont be delivered any quicker than the current proper NBN plan.
    Hubert Cumberdale
    • Wasn't a problem in yesterdays talkback, source discredited

      Suddenly it is. Comic beyond belief:-)
      Richard Flude
      • Hey fluddy you know what is really comical is your inability to explain how my long standing opinion on this topic and comment regarding David Braue's analysis = "source discredited". Do you somehow consider me the source???
        Hubert Cumberdale
        • Can you read

          Same story yesterday in talkback from the Oz was discredited in your opinion.

          David Braue writes the same huberdink love in. Comical!
          Richard Flude
          • I am commenting on David Braues analysis. If he has linked or referenced and articles elsewhere that has nothing much to do with me at all. Or do you believe David shares the exact same carbon copy opinion of other journalists on other websites?

            Furthermore it has even less to do with my long standing opinion on the matter. Is The Australian now agreeing with me? Good for them, it still doesn't make them credible but good for them for being three years late... Guess you'll be agreeing with me more often now that they have sanctioned it? Good for you too Fluddy.
            Hubert Cumberdale
          • Nothing to link today...

            and can't think for your self, so you fall back on ad hominem...classy Richard, real classy.
            Tinman_au
  • Skills and SKILLS

    I think there would be a much bigger skills shortage for the Coalition.
    Reasons:
    1. They are trying to get a huge percentage of the country covered by nodes in a year or two.
    2. I'd rather train someone to splice fibre than someone to take a hundreds of copper pairs and identify what premises they go to and move those connections to the node and have
    a. The phone service work with their number rather than the neighbouts.
    b. The internet connection work with their current service provider.
    c. Not connect pairs that don't go anywhere.
    d. Back to base alarms? Does dialup still work?
    Pilfer-52cec
  • Turnbull's curse

    Yes, the coalition will have an identical problem, and for the same reason.

    NBNCo could have directly managed work gangs, but was instead directed by Labor to appease the coalition by maximising private industry content, as a kind of trade-off for the role of monopoly wholesaler (which Turnbull has ironically now adopted).

    If the coalition starts again, to build its 2005 FTTN plan into the 2020s, will it take the centralised, dare I say socialist, approach and directly manage tradespeople? Hardly likely.
    umbria
  • Telstra Staff?

    "Turnbull may be planning to resolve this issue by simply engaging Telstra's existing field workers to build his NBN"

    The problem with this idea is that Telstra simply doesn't HAVE a large existing workforce with CAN skills any more.
    Why would Telstra be recruiting and training staff for what they regard as outdated and operationally expensive infrastructure that will not be their problem going forward.


    Either Labor wins thhe election (near zero probability) anf FTTP is rolled out and the copper CAN shut down
    or
    The coalition wins the election and must acquire the copper CAN to build FTTN

    Either way, the CAN is no Telstra's problem.
    Goresh
    • Methinks

      The coalition assumes they can either lease the copper on a fit for purpose including maintenance and faults using Telstra's existing organisation and facilities and equipment.
      Considering there has been far more remediation work required than Telstra expected, Telstra will have to apply a greater fudge factor if it is to be fit for purpose - could be extremely expensive for the Telstra shareholders otherwise.
      So that last mile of copper may be not as cheap as anticipated.

      As the communications infrastructure for Australia's future will be handicapped affecting our economy and limiting any decentralisation, the only thing left is to enjoy the comedy show and apply the microscope and the Torch.
      Hold Fluddy and the other experts to account, bet we will never hear from him as the proverbial starts hitting the fan
      Abel Adamski
      • "Hold Fluddy and the other experts to account, bet we will never hear from him as the proverbial starts hitting the fan"

        Abel you probably already noticed he is quite keen to avoid any scrutiny directed towards the coalition plan. If the coaltion clowns do win in September I expect the Turnbull apologists will rival Baghdad Bob by 2016 for sure if they don't disappear.
        Hubert Cumberdale
  • More NBNCo news; yep as expected

    "NBN Co is due to announce that 4.8 million homes and businesses will be included in the national broadband network by the middle of 2016, but telecommunications experts say rollout figures for the massive infrastructure project are “essentially meaningless”.

    In an attempt to convince voters before the federal election that construction is on track, NBN Co will add up to 1.3 million new premises and several hundred new areas to an updated rollout plan showing roughly which suburbs will receive broadband connections by the end of June 2016.

    ...

    “We’ve learnt from experience to take the figures that NBN Co provide with a pinch of salt,” Mr Lindsay [CTO iiNet] said. “You end up with these really large numbers where they say ‘20,000 services might be connected here’ and then suddenly ‘30,000 services will be connected straight away, somewhere else’.

    ...

    Senior telecommunications analyst Tony Brown said NBN Co needed to focus on fixing rollout issues instead of “putting out essentially meaningless figures to give the project political cover”.

    “The only serious metric you can use for a fixed network deployment is homes passed or homes connected and right now, NBN Co are passing only 150 homes per day [to existing homes],” he told AFR Weekend. “In order to meet the current target of completing the FTTH network by 2021 they will have to increase that ‘homes passed’ rate up to 5500 brownfield connections per day at peak rollout.”"
    http://m.afr.com/p/technology/experts_doubt_nbn_co_rollout_figures_ckgy2s7jg4IOaAqpY7q52J


    "essentially meaningless" figures obvious to all but the incompetent talkbacker; no qualifications or experience they've swallowed the spin.
    Richard Flude
    • Noticed Richard?

      http://www.theage.com.au/comment/the-pay-tv-cesspool-20130504-2j00w.html

      However being a slavish true believer I am sure you would have kept up with all the unOz articles.
      Then there was the article on ye good old unoz whingeing about OTT providers that would be competing with Ruperts offerings on the basis that they had made no contribution to the enabling infrastructure - Duuhhh News Ltd/Foxtel has been doing everything in its power to ensure that infrastructure NEVER exists regardless to the long term damage of the Nation
      Abel Adamski
  • Coalition's incentivisation of vandalism policy.

    With the Mal and the coalition promising to install FTTH in areas where Telstra copper has inadequate performance for the purposes of it's FTTN system, they will install FTTH in those areas in the same manner as NBN is currently doing.

    This is real "SMART" policy, $3000-$5000 has to be paid to get fibre to the home if the network is satisfactory in your area, if it's unsatisfactory it's installed at no upfront charge.

    This guarantees that 100% of the network is going to prove unsatisfactory when portable post hole diggers (hired for less than $100, bought new for less than $1000) or basic shovels pop up at 2am out of thin air and cans of acid are poured down the holes, I can see rapid deterioration of the old copper.
    Kevin Cobley
    • Now they talk of acid

      Such is the sense of entitlement. What a people we have created. Revolting.
      Richard Flude
      • Entitlement?

        The sense of entitlement displayed by the head of Myer, for example?
        Listohan
      • "Now they talk of acid"

        Why talk of acid when water, air and the passage of time will do the same thing?
        Hubert Cumberdale
    • do you seriously

      think people will damage telephone lines to become eligible for a fibre connection?
      Afterall i think proving such damage would be quite easy.
      Blank Look
  • How strong the promises?

    Turnbull (and Abbott) have made a consistently big issue of "cheaper, faster". Will Tony put it in writing and, if it is neither cheaper nor faster, are they prepared to promise to fall on their swords?
    Listohan
  • My new NBN plan is better than Turnbull's

    Telstra’s market capitalisation is currently 63 Billion dollars; I would propose Telstra be divided into 2 companies.
    Company (1) Telstra: Would own all mobile telephony, Foxtel and retail ISP/telephony operations, Sensis (directory operations) and a share of buildings currently owned by the Existing Telstra. (Market cap 33 billion)
    Company (2) NBN Co: Would own all Telstra ducts, pits and cables and a share of Telstra buildings and existing NBN Co assets (market cap 33 billion) (Australian government would recoup 3 billion for existing NBN Co assets).
    Under the charter for this company, the Federal government would contribute 3 billion dollars per year in new stock purchases at a fixed price for 11 years and end with 50% equity in 11 years.
    NBN co would sell IPTV channels, wholesale broadband/telephony services to all ISP’s at the same levels of pricing and the new company would build FTTH to the 93% of Australian homes, and satellite systems to the remainder.
    This structure has a number of advantages and has similarity to the Chorus build in New Zealand;
    1) The new NBN Co would have an existing income stream from infrastructure already in place.
    2) Would have a capital commitment equal to the commitments made by Malcolm Turnbull and Tony Abbott, but the equity structure and new company would already in place and already have a substantial shareholder base to oversee operating costs.
    3) Under a new Government the build could be restructured to make a faster build out in the major city CBD’s and densely populated high income areas close to the city centres, to provide a faster capital return rather than the low value and high cost rural build out being prioritized.
    4) Borrowing requirements for the new corporation would be much lower as an existing income stream would offset borrowings.
    5) NBN co would only install Fibre to the premises and then VDSL boards and equipment in the building’s telecom switch boxes. Private property owners (Strata Building’s and Offices would have to do their own fibre cabling, State Governments would legislate to allow majority votes to carry installation in buildings and require annual voting on cable installation, also allowing buildings to borrow and seek contributions to build the cabling.
    6) May allow a faster build out as The Private NBN Co would independently borrow to finance more lucrative areas being rolled out quicker.
    7) The New NBN Co would have a much better staffing and contractor arrangement already in place.
    8) No need for the Government to purchase any ducts, pits, cabling and buildings.
    Government could then sell its shareholdings at any time perhaps as early as 5 years down the line and if the financial situation of the new company is solid could sell its fixed price shares on acquisition thereby negating any investment. This would also allow Telstra to compete with NBN Co via its cable and Mobile services.
    Kevin Cobley