Excerpted from Renai LeMay at Delimiter.
Usually once a week or so, I get the chance to catch up with a senior Australian IT industry figure of some kind or another for a detailed chat. It could be a managing director of a major technology vendor or telco, it could be a senior industry analyst, it could be a chief information officer or it could be a politician such as an MP or Senator, or one of their staff members. Usually I do this sort of thing over the phone, but sometimes it’s over coffee. It’s all off the record — usually we’re just shooting the breeze and sharing background information to mutual benefit, rather than trying to pursue a certain objective.
I tend to find, and I believe I am not alone in finding this, that at the end of the conversation, no matter who you’re talking to or what you were initially talking about, the conversation turns towards the National Broadband Project (or, if you prefer, the Coalition’s Broadband Network under the new Government).
Everyone has their view on this most universal of project, because as fundamental telecommunications infrastructure it affects everyone. Almost everyone is of the view that the long-term future should focus on Fibre to the Premises, but there are a thousand views on how to get to that point, and a thousand views on every move which the Government of the day or NBN Co makes in delivering the policy.
This isn’t new; I’ve been having these conversations ever since the formation of the NBN back in April 2009, when the project captured the public imagination. However, something new has crept into the discussion over the past six months, ever since the Coalition took power in the September Federal Election: A sense of deep confusion and disquiet about what’s going on.
Previous to the Federal Election, there was a sense that the Coalition’s rival NBN policy, although markedly inferior to Labor’s, was at least a known quantity. Senior Australian technologists knew thatShadow Communications Minister Malcolm Turnbull planned to dramatically change the project, but that change was largely expected to focus on a single modification of the rollout model. And, even if few technologists liked the Fibre to the Node concept, the technology is being used in the UK and all throughout Europe. Again, this was a known quantity.
However, since the Federal Election, the conversations I’ve been having have changed in tone.
Now, when you speak to senior Australian IT industry figures about the NBN, the conversation starts the same way it used to, with various opinions being expressed about the latest news and what it means. But the enthusiasm and speculation it quickly peters off. After a few minutes, bigger and much more serious questions start to be raised and people start talking about their fears.
The first and most obvious one is the long-term future of Australia’s broadband needs. Senior Australian technologists could broadly accept Fibre to the Node as a concept from the Coalition, because it was obvious that in the long-term — say, 10 to 20 years — the fibre could be extended all the way to the premises. There’s precedent for this — in the UK, BT has already started extending its FTTN rollout to FTTP in certain areas, and there are similar movements in other countries which are a ways down the FTTN path.
However, the Coalition’s unexpected move in December to cancel the planned FTTN rollout in areas already covered by the HFC cable networks of Telstra and Optus has caused a deep-seated feeling of uncertainty in the industry.
It is certainly technically possible to open up the HFC cable networks to wholesale competition, extend their reach to more premises in their footprint, and even to extend fibre from the HFC junction points all the way to the premises. However, the problem is that this technique just hasn’t been pursued internationally to any extent. This approach will place Australia far our on its own in terms of its national telecommunications infrastructure. If it fails, as it may do, we’ll be back at square one, needing to upgrade Australia’s copper network to fibre, but potentially a decade or more behind other countries on that curve.
When you get to a senior level in the technology sector, more so than any other sector, you become aware that ‘going it alone’ in a technical sense and trying new things is a highly risky endeavour. Technology investment cycles are all about investing with the crowd at the right point on the development cycle. Invest too early (for example: The first Dot Com boom), and you may find the technology you’re investing in is overhyped and will be dropped quickly. Invest in the wrong technology (for example, WiMax) you will quickly find the industry passes you by as it focuses its efforts on something else.
Australia’s mobile networks have become the best in the world because companies such as Hutchison and Telstra massively invested at the right time in the right technology (3G) and in the right spectrum bands. But with its HFC cable move, many senior Australian figures suspect, the Coalition is investing too late in a technology which is increasingly viewed as obsolescent.
Then too, the disquiet also extends to other issues.
Malcolm Turnbull came to power as Communications Minister promising a clear set of broadband objectives for NBN Co, delivered through a clear set of technologies, with an additional mandate to increase the transparency and accountability of the project. But since that time, almost every element of the Member for Wentworth’s platform has been thrown out the window. Despite the Minister’s protestations, it has become very clear throughout the past six months that Turnbull has no intention of even pretending to play by the rules he laid down for the governance of NBN Co and the project as a whole.
Turnbull spent much of his time in Opposition heavily criticising the previous Labor administration’s approach to the NBN, including NBN Co’s executive team and the project’s lack of a cost/benefit analysis.
But in his first six months in the role, our new Communications Minister has subverted NBN Co’s organic hiring process by putting in place an executive team at the company with which he, or the Liberal Party, have existing close links, jettisoning along the way a number of executives and board directors who didn’t fit the mould.
That team, and a cluster of consulting firms which Turnbull originally said wouldn’t be hired, put together a supposedly independent Strategic Review of the company’s operations and future which conveniently perfectly fit the Minister’s vision for a future landscape based on HFC cable and Fibre to the Node.
And of course, yesterday Turnbull abandoned any pretence at consistency by ordering NBN Co to go ahead with the ‘Multi-Technology Mix’ approach recommended by the Strategic Review, without even waiting for his own cost/benefit analysis to be delivered — an analysis, we might also note, that had already been stacked with open Liberal supporter and staunch critic of Labor’s NBN vision, Henry Ergas. Questioned about the move, Turnbull said it was aimed at allowing NBN Co to get on with its job — a luxury he certainly never afforded Labor.
In my conversations with senior IT industry figures, there has always been a degree of understanding of the politicisation of the NBN project. People understand that the best technical or commercial outcome may, at times, be sacrificed to political aims for the sake of expediency. That’s nothing new: The sector as a whole is experienced with this dynamic because of the decade-long process of opening the industry to competition and privatising Telstra. A certain amount of this is viewed as the cost of doing business with the Government.
However, the level of disquiet in the conversations I am having at the moment speaks to something deeper. The IT industry is highly aware that Turnbull has, only a few months after the election, completely abandoned the policy the Coalition took to the election, installed his own cronies at NBN Co and is pumping out a series of heavily compromised audits and reviews, some of which appear solely aimed at ensuring Labor will never win power again. Along the way, the Minister is regularly saying one thing and doing something completely different, including blithely taking steps which he strongly criticised the previous Government for.
And there is also the ongoing investment stasis which Turnbull has placed the telecommunications industry in, courtesy of his ongoing refusal to make a regulatory decision about whether TPG, Telstra, Optus and iiNet should be allowed to deploy their own networks in competition with NBN Co’s infrastructure.
The incredible ongoing performances of NBN Co executive chairman Ziggy Switkowski, in which he appears unable to speak the name of his own company (repeatedly referring to it as “NBN” instead of “NBN Co”) and constantly downplaying the need for fast broadband to the Senate as well as stating that NBN Co’s technology choices don’t actually matter, are not helping matters.
Amid all this, precious little attention appears to be being paid to the risk of catastrophic long-term outcomes for Australia’s broadband environment as a whole.
Against my own wishes, I am viewed as something of an expert on the NBN, having reported on the telco sector for most of the past decade. And so it is natural that I am asked, constantly, virtually every day, for my private opinion on what is going to happen next. What does it all mean? Is the Coalition seriously trying to destroy the whole project? What will the future of Australia’s telecommunications environment look like? Is Turnbull mad? Or just incompetent?
I try to explain to people the truth: That we have a Minister who is constantly, on a daily basis, acting chaotically, inconsistently and without integrity; sometimes even unethically. That it’s impossible to forecast the path of NBN Co or the rest of the industry because of this fact. That, when it really comes down to it, I just don’t know what to expect on a day to day basis when it comes to what is supposed to be an extremely long-term and stable infrastructure project.
In my conversations with people, this doesn’t really help them. They come to me looking for certainty and insight. The revelation that I am just as confused as they are leaves them profoundly disturbed, as it reinforces their own impression that the Government is in complete chaos in this area, and that this may significantly harm Australia’s technology sector and broader economy in the long-term.
It also doesn’t help me. In just six short months, we have seen such extraordinary and often highly inconsistent behaviour from Turnbull when it comes to the NBN that I fundamentally don’t know how to write about the project any more.
…Over the past several weeks the Coalition has given increasing indications that it wants to offload NBN Co’s satellite business. But yesterday Turnbull reassured us that it wasn’t up for sale any time soon. Before the election the Liberal MP repeatedly criticised Labor for its lack of a NBN cost/benefit analysis. Now we are told there is no need to wait for one. Before the election we were told that FTTN was the order of the day for the NBN. Now it’s HFC cable. NBN Co’s Strategic Review was to be put together by the company itself. But when it was actually delivered, it was presented by a bevy of consulting firms. Turnbull was wholly against a fully FTTP rollout for Tasmania only a few months ago. But then he stated he was open to overhead fibre trials. And so on. It never stops.
Today NBN Co announced it had made a series of core executives — head of corporate and commercial Kevin Brown and chief technology officer Gary McLaren — redundant, with chief financial officer Robin Payne also to leave the business after “acting” in his role for a while. I’ve never heard of a company which has offloaded its CFO, CTO and head of commercial in one go. And I don’t know how to report it. Is this a grossly political move because the trio supported retired founding NBN Co CEO Mike Quigley? Or just new NBN Co CEO Bill Morrow putting his own team in place? Either way, it’s virtually unprecedented in Australia’s corporate sphere for a company to get rid of three such competent senior executives in one go.
As a journalist, you can only deal with this constantly shifting landscape so long before your head starts to spin with confusion. At the moment, I distrust virtually everything that Turnbull or his NBN Co executive team has to say on the NBN, because it very much feels like the project as a whole could literally turn on a dime depending on what the Minister had for breakfast this morning.
