Pressure mounts on NBN’s Morrow

The re-design of the National Broadband Network carried out by Prime Minister Malcolm Turnbull during his time as communications minister is now at the front and centre of this election campaign, but clearly not in the way he had intended.

The complaints by NBN management that lead to the outrageous raids by the Australian Federal Police on Thursday night were about series of leaks that were laying bare uncomplimentary details about the so-called Multi-Technology Mix network that was Mr Turnbull’s brainchild.

Indeed, he laid out his handiwork in broad brushes his press conference in Tasmania this morning:

“We have turned around the NBN by putting in new management, new board, a new approach.”

To recap, this was Mr Turnbull’s original claim: That he would cut the costs of a future-proofed NBN 95 per cent fibre to the premises (with satellite and wireless technologies covering remote areas). The company would switch to the Multi-Technology Mix of FttP, fibre-to-the-node running into Telstra ageing copper network, and the ageing Optus and Telstra hybrid fibre coaxial cable (HFC) networks that had been built for pay TV. Mr Turnbull also promised this would speed up deployment.

The first leak was a Fairfax Media story about the dilapidated state of the Optus HFC network, headlined Leaked NBN budget blowout documents threaten to embarrass Malcolm Turnbull.

“Internal NBN documents state the Optus network is “not fully fit for purpose” and some equipment is “arriving at the end of life” and will need to be replaced. Other parts of the network are oversubscribed and don’t have sufficient capacity to support NBN services,” Fairfax wrote.

“According to the documents, building over the Optus HFC network with Telstra HFC or a mix of other technologies would deliver better results than upgrading the current network. But it would require a peak funding increase of between $150 million and $375 million and see NBN miss its rollout targets by approximately 300,000 premises in 2017 and 330,00 in 2018.”

The bad news for the PM and his hand-crafted NBN is that it kept coming up with cost blow outs for the repair needs of the copper network, as revealed in The Australian (the leakers have been ecumenical in their drops).

“Confidential NBN documents obtained by The Australian reveal the company is looking at a tenfold blowout on what it originally thought it would cost to ¬remediate the old copper network that forms the basis of the Coalition’s fibre-to-the-node rollout,” The Australian wrote.

“The leaked documents for the first time reveal the cost that the NBN will incur to fix the copper network it bought from Telstra last year in an $11.2 billion deal. NBN expects to spend $26,115 per node to fix Telstra’s copper lines to ensure it can deliver the speeds and service quality promised for Malcolm Turnbull’s mixed-technology network.

“The documents make a mockery of the assumptions contained in a 2013 strategic review, prepared after the Coalition won power, which put the cost of remediating copper connections at just $2685 for each node.”

It’s also worth considering why the NBN is leaking like a sieve. A number people who have worked inside the company – and well before these leaks occurred – have said that there is a fundamental disconnect and plenty of friction between the ‘management’ team and the technical part of the business responsible for the rollout.

The management team was all brought into the company by Mr Turnbull’s hand-picked chief executive, the smooth talking American Bill Morrow.

The technical, or networks, team has long been lead by former Telstra engineers brought in by chairman Ziggy Switkowski, when he was executive chairman in the interregnum between the sacking of foundation a chief executive Mike Quigley and the appointment of Mr Morrow.

Mr Morrow has always danced to Mr Turnbull’s tune, and there has long been push-back on the Multi-Technology Mix from senior technical team members who understand the technology – especially Telstra’s copper network – far better than Mr Morrow and his team ever could.

It’s worth noting that the fall guy for the NBN’s failure to meet its rollout targets was chief operating officer Greg Adcock who was given the heave-ho by Mr Morrow last October, and he was only the most high-profile of a long line of departures from senior management. In retrospect, this was a sign of things to come.

Last September Mr Quigley, who is nobody’s fool technically as a trained engineer with four decade’s experience in the telecom sector, laid out the problems in detail.

“NBN Co’s latest Corporate Plan, released in August 2015, shows a total funding requirement of up to $56 billion for the Coalition’s MTM-based NBN. This is an increase of $15 billion from the $41 billion predicted in the December 2013 Strategic Review. And an increase of $26.5 billion from the $29.5 billion promised in Coalition’s Policy document of April 2013,” Mr Quigley wrote

“The $15 billion increase from the Strategic Review of December 2013 to the August 2015 Corporate Plan has nothing to do with FTTP costs and the decisions made by the previous NBN Co management.

It has everything to do with the persistently over-optimistic assumptions about the true costs and timescale for deploying the newly-introduced MTM technologies of HFC and FTTN at scale, and the huge impact that this has had on the complexity of the rollout.:”

Recently NBN has been sneaking fibre closer to the home, as explained by last week. In the same piece, this publication also pointed out the NBN had the potential to become a potent election issue if the opposition playing its cards right.

Bill Shorten and his communications spokesman Jason Clare have been a flying head start by the NBN management team. Mr Morrow surely signed off on the AFP complaint. It is a tactics eerily reminiscent of those employed by one of his countrymen, former Telstra chief Solomon D. Trujillo.

The raid is emblematic of the unerring consistency of Prime Minister Turnbull in managing to find his own goal with even the most difficult of kicks.

Mr Morrow’s reputation before taking the job at the NBN was of a smooth-talking management restructurer, who never stayed long enough in a job for anyone to quite know whether he had done a good or bad job.

Perhaps that’s not the case this time. It is increasingly looking like the Australian taxpayer has been sold a pup by the both him and the man who wants to run the country for the next three years.

Do you know more? Contact James Riley via Email.

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