The former CEO of the company charged with rolling out Australia’s national broadband network (NBN), Mike Quigley, says he feels “incredibly disappointed and sad” that the national network hasn’t turned out to be the complete solution that was originally planned.
ABC TV’s Four Corners on Monday pored over the history of the NBN and how it ended up in the current state that’s seen complaints to the ombudsman soar by 159% last financial year.
Quigley, who was the first chief executive of the NBN from 2009 to 2013, oversaw the company during the former Labor government’s vision of running fibre optic cables all the way to people’s homes. He retired just as the Coalition government was first elected under Tony Abbott and changed the design so that it wouldn’t run fibre to the doorstep, instead opting to provide a faster rollout schedule to nodes at street level, sacrificing performance and saving costs.
“I feel incredibly disappointed and sad that an opportunity to build a first-class network that would set Australia up for the future was squandered. And squandered for the wrong reasons. Demonstrably the wrong reasons,” he told Four Corners.
The current chief executive Bill Morrow conceded that the change to the Coalition’s multi-technology mix (MTM) model “increased complexity” and the “probability is pretty high” that the network would have to be upgraded in the future to add more fibre.
“When? That’s pretty hard to predict. How much? That’s pretty hard to predict. And it comes down to the question of do you pay the money now or do you pay it forward as you need it. And [the latter] is the model that the current government has chosen and it’s the model which the NBN is building up on.”
Four Corners reported that there is “no budget or commitment” for future upgrades for Australians stuck with inferior NBN performance.
“MTM will be built but it will have to be ultimately upgraded at a cost of tens of millions,” Quigley said.
Aside from the technology switch after a change of government in 2013, the NBN has also had to operate knowing that it had to provide dividends and profits to pay back its costs to the government and make it attractive for a sell-off five years after completion.
Earlier on Monday, prime minister Malcolm Turnbull admitted that the current 3% return would not be enough if it were a private company.
“It certainly is not a commercial return that the stock market would expect,” he said.
Critics of the NBN, including telco entrepreneur Bevan Slattery, have previously called for the NBN’s costs to be written off in return for the indirect benefits to Australia’s education, business and international competitiveness. But such a write-off has also been a politically sensitive issue for both sides of politics.
“I said in 2010, 2012, and 2015, and I’ll say it again in 2017. The NBN will never make a commercial return,” Slattery told an industry conference in April.
“This is the single fundamental problem that is screwing up broadband in this country… It was a stupid policy dreamt up on a plane between Sydney and Canberra between the prime minister and [communications] minister of the day, and we’re still living with the consequences of those stupid decisions.”
When asked at a press conference whether the NBN was “a mistake” and a “waste of money”, the prime minister agreed – but blamed the previous Labor government.
“Well, it was a mistake to go about it the way they [Labor] did; setting up a new government company to do it was a big mistake,” Turnbull said.
Both Four Corners and Turnbull cited New Zealand as a better model, where that country’s biggest telco had its network infrastructure team split out from its retail business – then commissioned to build a national fibre network.
In Australia, the NBN company pays an ongoing fee to incumbent Telstra to gain access to infrastructure spaces like underground pits.
“So the way Labor set it up was hugely expensive. And there are many billions of dollars wasted — and I’ve said this many times, it’s a fact of life — that we can’t recover. So having been left in a bad place by Labor, what we are doing is ensuring we deliver it as quickly and cost-effectively as possible but I have to say to you, again, one complaint is one complaint too many,” Turnbull said.
The Labor prime minister that first established the NBN, Kevin Rudd, appeared on ABC TV’s 7:30 program to defend his government’s original model, saying it was “perfectly designed for this nation’s needs”.
“News Limited did not want the National Broadband Network. News did not want fibre to the premises and the reason they didn’t want that is because it would provide direct competition to the Foxtel cable network in this country.”
The Foxtel cable network is part-owned by News Corp Australia, previously News Ltd, through its holding in Foxtel.
Earlier on Monday, Morrow called on the government to either regulate to protect the NBN from the rising threat of mobile networks or inject extra cash into the organisation to allow it to survive.
In response, the boss of the competition watchdog ACCC, Rod Sims, labelled such protection of the NBN from private competition “disastrous” for consumers, predicting it would drive up internet prices.