NBN Co’s whole board resigns: Report

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news The entire board of Labor’s ill-fated National Broadband Network has reportedly resigned, a victim of the poisoned relationship which had sprung up over the past year between the project’s management and new Communications Minister Malcolm Turnbull.

NBN Co’s board is composed of a number of senior executives from a variety of industries. Its chair, Siobhan McKenna, has been a director of NBN Co since August 2009 and is otherwise best known for being the managing director of media magnate Lachlan Murdoch’s investment company Illyria, as well as for having a history as a partner at management consulting firm McKinsey.

Other directors include Terry Francis, who was most recently chief executive of Bank of America in Australia and who has a history in finance, lawyer Alison Lansley, formerly a partner with Mallesons Stephen Jaques, Brad Orgill, who also has a finance background, former investor banker, government auditor and project director of the the proposed sale of the New South Wales government owned electricity generating plants Kerry Schott, and Rick Turchini, who has a long history in the construction industry. NBN Co chief executive Mike Quigley, who has already signalled his intention to retire from NBN Co, also has a spot on NBN Co’s board.

However, Turnbull significantly criticised NBN Co’s board and management while in Opposition, arguing out that no member of the company’s board had direct experience with managing the construction of a major telecommunications network, despite this being the primary nature of NBN Co’s work.

The relationship hit a low point in July this year, when a series of sharply antagonistic letters between the two sides were published that highlighted the depth of the antagonism felt on each side. NBN Co’s board, at the time, hired lobbying firm Bespoke Approach to represent it to the Coalition, a move Turnbull saw as inappropriate. NBN Co’s board also retained legal counsel regarding the situation.

This morning, the Sydney Morning Herald reported that the the board of NBN Co had offered to resign “en masse”, believing it did not have the confidence of the incoming government. The article repeated recent reports that former Telstra and Optus chief executive Ziggy Switkowski was set to be appointed executive chairman of NBN Co as an interim measure. We recommend you click here to read the full article.

Analysis published by Delimiter’s sister site Delimiter 2.0 (paywalled) has shown that both Turnbull and NBN Co’s board severely broke with convention as their fraught relationship worsened while the Liberal MP sat in Opposition.

It is believed that Turnbull broke with long-held political convention by directly attacking the management of a government business enterprise, particularly NBN Co chief executive Mike Quigley and board chair Siobhan McKenna, with politicians historically preferring to focus on attacking their political opponents rather than the public servants and other employees carrying out their policies.

On NBN Co’s side, it is believed that the move by NBN Co’s board to hire a lobbying agency to approach the Coalition breaches long-held conventions about the very limited conditions under which government bureaucrats and employees of government business enterprises such as NBN Co may approach and inform the Opposition of the day.

Recent reports by several publications have claimed that Turnbull has already approached former Telstra and Optus chief executive Ziggy Switkowski to act as executive chairman of NBN Co. However, analysis conducted by Delimiter 2.0 (paywalled) has shown that Switkowski has little direct experience with constructing telecommunications networks, and no experience with the telecommunications industry over the past nine years since he was asked to resign by Telstra’s board in December 2004. Switkowski held the Optus role for only a little over a year, and the Telstra role from 1999 to 2004, during a period where Telstra did not undertake significant construction work on new network infrastructure.

opinion/analysis
Well, I guess we could have all seen this coming. This action by NBN Co’s board is the right one — it does not enjoy the confidence of its new shareholder ministers, primarily Turnbull, and it’s completely unsurprising that it would offer its resignations to Turnbull. I wouldn’t be surprised if Turnbull kept one or two directors to ensure continuity — but I also wouldn’t be surprised if the Minister accepted most of the resignations and moved on.

Personally, I don’t think NBN Co’s board, in its various incarnations since the company was formed in 2009, has done a terrible job during NBN Co’s setup period. The company is demonstrably established and it was demonstrably delivering on the previous Labor Government’s NBN policy. Sure, there had been delays and debacles, but I think you can expect this with any major infrastructure project of the kind the NBN represents.

However, Turnbull is also correct, in that the board does have little to no experience with major telecommunications network construction. This is a bit of an indictment, to be sure. Of course, a company like NBN Co will benefit from having bankers and lawyers on its board, to give it a bit of variety and wider experience. But it does also need experts with deep domain experience in NBN Co’s business. Right now, NBN Co’s board doesn’t have that.

One final memo to Malcolm Turnbull: I strongly suggest you re-examine Ziggy Switkowski as potential executive chairman of NBN Co, if the executive really is in pole position at this point. Switkowski really does not have the experience which the new Coalition Government has said it is seeking for this role.

31 COMMENTS

    • With each day that goes by, the number of people Turnbull can blame when things unravel becomes smaller.

      And the number of warnings he has becomes greater.

      Greater ego hath no man than this: that a man makes dismisses the people most able to assist him to complete his assigned task. I think there is something in the Good Book too about pride.

  1. “it does not enjoy the confidence of its new shareholder ministers, primarily Turnbull”

    I expect that the sentiment is mutual, and they think that Turnbull is an idiot. Frankly, he has acted like it with his disgraceful stint as shadow comms minister and looks very much intent on keeping that same putrid direction.

    I wouldn’t want to work on his misguided and ideologically raped version of the NBN. Let someone without ethics (like Ziggy) follow Malcolm’s plan to destroy the potential benefits of a true NBN.

  2. There really won’t be much left soon, if my inside sources at NBNCo are correct, there are a lot that just don’t want anything to do with Turnbull’s plan and will be resigning.

  3. I honestly used to think that Malcolm Turnbull had a level of personal integrity that put him a cut above above the likes of regular politicians like Tony Abbott. I was wrong.

  4. “and the Telstra role from 1999 to 2004, during a period where Telstra did not undertake significant construction work ”

    I think thats hardly fair to say, as you know fully darn well, serious competition was not as strong back then, as it is compared to now, some 10 years later.

    Optus was only just entering the game seriously around that period. Not to mention that in 2000 when C&W sold off Optus to Singtel, the brakes were put on Optus investments too for a bit (including all the unlimited Optus cable plans that C&W propped up Optus with ended with that sale as Singtel couldnt/wouldnt continue to subsidising the leaches.)

    • I think you might have missed the point. Turnbull has criticised Quigley and the whole board for not having any experience with building big networks. Well, neither does Ziggy.

      Regardless of why he lacks that experience, it is still a fact that he lacks it – and this fact would make Turnbull look like a massive hypocrite if he hired Ziggy.

        • Quite.

          Turnbull’s lack of ‘telecommunications’ experience didn’t stop him taking a director position with OzEmail…

          At the board level, it’s actually pretty common to have members without experience in whatever enterprise the company is involved in (Take WestFarmers as an example, but it applies to pretty well any ASX listed company). The CEO (who answers to the board) is however, expected to be an expert in the field.

          Considering his previous experience with Alcatel-Lucent, I’d say Mike was actually very well qualified for his role (as can be demonstrated with Telstra’s partnership with Alcatel for the trails they plan to run).

          I guess time will tell as to whether Malcolm really does know what he’s doing…

  5. Renai LeMay – Can you please point to an Australian corporate chief who is available who does have experience in nation-wide telecommunications rollout?
    Isn’t that why they hire engineers?
    More important to the success of the scheme was the funding, financial and legal aspects as with all major infrastructure projects there were many significant hurdles in those areas to over come.
    The failure by you and many others is that you are measuring the NBN on the same yardstick as a business venture. It is not. This is the new centuries Trans-Australian Railroad or Snowy Mountain scheme. We don’t need self-interested telco chiefs, we need people who understand financial and legislative complexity who also have the ability to negotiate at a high corporate level.
    It seems that the words of Menzies still ring true “…. we in Australia are still, I think, handicapped by parochialism, by a slight distrust of big ideas and of big people or of big enterprises “

      • “Quigley had a substantial amount of experience with this kind of rollout due to his history in the US” — not if you listen to the Earl of Edgecliff…

        Would there be anyone on the BT board that would work? He holds them up as the shining beacon of FttN, and you cant argue about lack of experience so that might be a decent source of execs.

      • I think people are confused about what the Board of Directors do and what the company does.

        The board is more about governance and overseeing the performance of the CEO. It’s not about directing day to day activities of the company – otherwise they would hired to be the CEO, COO, CFO etc etc.

        Anyway, the entire board resigning means that Turnbull will have to find a replacement one ASAP (or reject their resignations – thus endorsing them in their position on the board).

  6. Once more we have Malcolm accusing people he doesn’t agree with of have no experience. Well what experience as he got ? He is a lawyer but… well say no more; he has some investment experience which includes unsurprisingly involvement in wireless technology and finally he has experience in politics wow!!! what a CV. The last time he made one of these silly accusations was when he accused the Treasury of have no experience in water and that didn’t wash too well.

    Finally it looks like Ziggy is waiting on the sidelines. Lots of experience there but regardless of that he was no bright star in his time as CEO of Telstra.

  7. Looks like things could start unraveling around Malcolm. He is about to find out, like many of his colleagues are, that the art of ‘doing’ is much more difficult that that of “criticizing”.

    It is one thing to bag FTTP for the benefits of those who are technologically uniformed, it is another to convince those who know better.

  8. And here it all comes,

    The best tweet I saw when the liberal party one was

    something along the lines of Australian people you have 1000 days to think on your choice

    • Interesting article from Sortius about this:

      http://www.sortius-is-a-geek.com/vote-confidence/#more-3465

      “…So why did Turnbull demand the whole board resign? Basically Turnbull is setting up NBN Co to fail. I’ve written on this previously, & now I’m as sure as ever that Turnbull’s intention is to destroy the NBN, even now they are in office. This is the first step in many that will ultimately end in Telstra purchasing the NBN for below cost price….”

      • Thanks for the links Mark, interesting read… Hmm Liberal are going to town with getting rid of people :/

        • You’re welcome. I’m a bit concerned with about what MT is up too. Really concerned!

          Cheers!

  9. This certainly is concerning, hopefully Turnbull can assemble a new team soon and one that is totally impervious to “cost blowouts” & “delays”. So far there have been more resignations than the number of nodes installed. Not a good look especially since Turnbull was very adamant about rolling out their network sooner. So many people in desperate need of a bit faster than ADSL2+ speeds and there is only 1194 days to go, can he do it? We. Just. Don’t. Know.

    • Well based on the number of FTTN premises rolled out to date which is 0 and the amount Turnbull has spent which I going to assume is a positive integer using LNP math for cost blowout and delays it is going to take the Turnbull Infinity years and infinity billion dollars to implement can we sack him for this hug infinity % cost blowout and delay.*

      *I know a/0 is not infinity but I’m using LNP math which based on their documents does seem to based on real number arithmetic.

      I say this because I think the whole will rapidly precede beyond a joke so I’ve got to get the joke in now.

  10. I know many of the engineers and designers, network operations people at NBN co as I have worked in the Telco business for 25 years. Basically the mood at NBN co is that Malcolm has killed the vision and the future of the company.

    Basically most of them feel that they can look forward to a support role in NBN as they deploy cheap near narrow-band technology and re-commission the old equipment to reduce costs as much as possible.

    So why would you want to work for a sinking ship, sorry that should be the NBN co ?

  11. Meanwhile, Telstra is ramping up a trial, out of seemingly nowhere (I’m sure this has been on the back burner for a while, perhaps) and TPG is ready to gobble up a bunch of MDUs.

    There’s not going to be a chance, really, for “faster, cheaper”, just “slower, more fractured”. Perhaps Turnbull can place a military figurehead at the helm of broadband execution?

    Seems to be in vogue within LNP at present.

    • “There’s not going to be a chance, really, for “faster, cheaper”, just “slower, more fractured”. Perhaps Turnbull can place a military figurehead at the helm of broadband execution?”

      Indeed and then tell us they therefore won’t be announcing any numbers relating to the roll out…

      Ah nothing like providing little or no transparency having previously damanding maximum transparency…

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