opinion/analysis by Renai LeMay
12 November 2013
Image credit: Internode
That moment which many Australian technologists fervently hoped for but never expected to see has come to pass: Simon Hackett has been appointed to the board of the National Broadband Network Company. But what questions should the Internode founder be asking NBN Co’s executive management team? Here’s five ideas to start with.
Right now, there’s a lot of excitement in the telecommunications industry regarding the appointment announced this morning of Internode founder Simon Hackett to the board of the National Broadband Network Company. And it’s not hard to see why.
Much of the industry, at this point, retains a deep cynicism about the actions which new Communications Minister Malcolm Turnbull and the Coalition in general have taken with respect to the NBN project as a whole since the conservative side of politics swept to power in the recent Federal Election. Appointing a controversial new NBN Co executive chairman who’s been out of the industry for almost a decade? Hand-picking several other NBN Co executive staff with personal connections to Turnbull or the Coalition but little direct experience deploying fibre telecommunications infrastructure? Appointing a slab of new external consultants? Radically altering the NBN future rollout map? None of these actions have sat comfortably with the Australian population with regard to an important infrastructure project they are keenly interested in.
Hackett’s appointment, as the wave of rejoicing on social media today demonstrates, is the first real win for Turnbull in the post-election national debate about the future of the NBN under the Coalition. It is the first step Turnbull has taken with respect to NBN Co which the general public will wholeheartedly approve of.
The appointment strongly demonstrates that Turnbull is not afraid of having independent voices on NBN Co’s board. Hackett has been a strident critic of quite a few of NBN Co’s actions and policies in general and has not been afraid to go toe to toe with previous Communications Minister Stephen Conroy on the issue, blasting the Labor Senator repeatedly in public for his NBN missteps. His appointment signals that NBN Co’s board and management team over the next several years will not wholly be composed of ex-Telstra executives with close connections to Turnbull or the Coalition in general. Hackett’s not a “yes man”, by any measure.
It also helps that Hackett has usually eventually been proved correct in his criticisms of the NBN, despite the fact that his comments on the project have often gone against the mainstream view at the time he espoused them. It seems very clear that Australians can rely on the Internode founder to be a strong force for holding the NBN project as a whole on track and helping to make the right decisions with respect to the project.
Then too, the executive’s vision, transparency and guts bring a weight to NBN Co’s board that it had previously been lacking.
Not for nothing (and not just for their similar choice of facial hair and elegant glasses either) has your writer previously compared Hackett to Gordon Freeman, the stubborn protagonist of Valve’s seminal video game Half-Life 2. Hackett has Freeman’s drive, energy, and very likely his engineering skills with a crowbar. For the NBN, Hackett has long been the right man in the wrong place. His appointment this morning perhaps places him where he can be most useful to the project.
Having said all this, I want to introduce a note of caution to those who are already pegging all their hopes for the salvation of the ailing NBN project on Hackett. In the immortal words of Brian’s mother, he’s not the messiah — and he’s not going to singlehandedly wrench the NBN back on track. That’s not the role of a non-executive board director on the project — and it won’t be Hackett’s role either.
Hackett’s role, like other non-executive directors on NBN Co’s board, will primarily be one of helping to ensure strong governance of the company over the next few years. At NBN Co’s regular board meetings, he will constructively challenge and contribute to the company’s strategies in meeting its aims. He will help to hold NBN Co’s executive team to account for their performance. He will keep an eye on NBN Co’s finances and operations and also have a role in appointing or removing senior executives such as the new CEO the company is currently seeking to hire.
Perhaps most of all, Hackett, like all the directors on NBN Co’s board, will be responsible for interpreting key Government statements of policy such as the Statement of Expectations (PDF) which the Government recently issued to NBN Co, and translating that policy into concrete company strategy. As an example of this, one of the first projects which Hackett will no doubt take a small hand in will be the development of NBN Co’s Strategic Review due in three weeks — although he’s coming in a little late to influence the document too much.
So what can Hackett achieve in this position? I would like to suggest a few areas in which he might take an active interest.
Firstly, I would suggest that Hackett seek to form a sub-committee of NBN Co’s board to specifically look at the construction issue on an ongoing, probably weekly, basis. This specific issue — the actual deployment of NBN Co’s network infrastructure, especially its FTTP network rollout, is the main issue bedeviling the company at the moment and it’s the area which it desperately needs to focus on, irrespective of whether it eventually pursues a predominantly Fibre to the Premises or Fibre to the Node rollout. Under either scenario (or the more likely mix of both), construction will be the main issue, and NBN Co’s network rollout is suffering drastic problems due to a combination of factors such as the poor performance of its contractors and issues with asbestos in Telstra’s network.
Hackett doesn’t have a huge amount of experience with fibre network construction, but on NBN Co’s board, he has some of the most, alongside Patrick Flannigan, the company’s former head of construction who was appointed to NBN Co’s board alongside Hackett today. Also on that committee should sit Kerry Schott, who has a great of infrastructure experience as the long-time chief executive of Sydney Water. Unlike most of the other NBN board members, these three have actually built stuff.
A construction sub-committee of the NBN board could keep closer tabs on this issue than the whole board, communicating regularly with NBN Co’s new chief operating officer Greg Adcock directly and keeping Adcock and his team on a short leash. Former NBN Co board chair Siobhan McKenna started this process this year in the six months before the election; it needs to continue, and a dedicated board sub-committee is a good way to handle this urgent situation. This sub-committee should then report to the wider board.
Should NBN Co eventually hand off much of its construction work to Telstra, as many in the industry, including the writer of this article, believes it should, then the nature of that construction sub-committee would probably change markedly.
But until NBN Co’s negotiations with Telstra are nailed down — which will probably take six months — construction still needs to go ahead and be watched very closely by NBN Co’s board. The progress of those negotiations, I would add, should probably be overseen by another board sub-committee, likely including at the very least former Telstra executives Ziggy Switkowski and Justin Milne.
That major focus out of the way, other areas which Hackett should focus on should also play to the Internode founder’s strengths.
Hackett has been very vocally critical of the controversial decision by the Australian Competition and Consumer Decision to set a large number of Points of Interconnect for the NBN to link its network with the networks of retail ISPs, and it’s time that decision was revisited again. Hackett has extensive experience in dealing with the regulator from his Internode days.
As a sub-component of this, the ISP industry — and Hackett personally — has also expressed significant concerns about the long-term viability of the Connectivity Virtual Circuit charge which NBN Co charges retail ISPs as one component part of its broader wholesale package. It’s definitely time this issue was looked at again, now that NBN Co has a significant bulk of end user customers connected to its network.
Other major issues for NBN Co which Hackett should be looking at include the future of non-NBN Co fibre networks such as the FTTP network Telstra built in South Brisbane, and the TransACT FTTP network in Canberra which NBN Co bought from iiNet in May this year. Other candidate networks to be part of NBN Co’s footprint include the patches of FTTP fibre in new estates located around Australia and owned by telcos like Telstra and Opticomm.
Most of this infrastructure is ultimately slated to be part of NBN Co’s infrastructure, but we’ve seen literally zero action in most of these areas over the past several years. I’d like to see Hackett find out what the hell NBN Co is planning, especially with relation to South Brisbane and TransACT in Canberra, where retail customers are crying out for competitive broadband options, and escalate these issues.
Another area where Hackett is strong relates to end user equipment, where the Internode founder has made a number of very public suggestions about ways that NBN Co could cut its costs and deliver a more functional network. I’d like to see Hackett get involved in this area with NBN Co.
Now, this seems like a big list. But let’s keep in mind that Hackett’s thinking in quite a few of these areas is already well-advanced. Both with Internode and at iiNet, the executive is already completely across many of the areas which NBN Co works in, and really just needs update briefings to get access to internal NBN Co information to better inform his decision-making. In all of these areas, Hackett will be ideally placed on NBN Co’s board to influence (not control) things for the better.
This list also contains a combination of both long-term and short-term issues. There is absolutely no doubt that Hackett could achieve some relatively quick wins with NBN Co’s strategy by tackling areas such as its PoI structure, its NTU gear and the way it deals with networks such as South Brisbane and TransACT in Canberra. A lot could be achieved in these areas in just six months of focus. In the long term, strong oversight of NBN Co’s construction activities would benefit everyone.
Finally, I’d like to mention one other area which Hackett probably shouldn’t be directly involved with, but which he should maintain a laser-like focus on to ensure accountability: NBN Co’s renewed deal with Telstra.
Hackett is pretty much the only member of NBN Co’s board who wouldn’t inherently look on a major company like Telstra with favour, or at least ambivalence. Virtually every other director has had some involvement with Telstra at some point, be it being directly employed by the company or, as in the case of Alison Lansley, working for Telstra’s long-term main law firm Mallesons.
NBN Co’s renewed contract with Telstra will be critical to the future success of the project, but there are many ways it could go catastrophically wrong. Hackett has spent much of the past two decades building a national broadband industry despite Telstra’s best efforts; often fighting the telco directly in court, in front of the ACCC, and in the retail market. He’s not best placed to maintain direct oversight of NBN Co’s relationship with Telstra (as former Telstra executives, Switkowski and Milne would have that role), but a dissenting voice and independent eye is very much needed with respect to this issue. In fact, it’s probably one of the main reasons Turnbull wanted Hackett on NBN Co’s board to begin with.
The obvious caveat to this whole article — and one I suspect many readers will raise — is that Hackett should be focused on trying to convince the Coalition, through making a case for it using NBN Co’s resources, that it should abandon its Fibre to the Node-based NBN policy and return to Labor’s FTTP strategy, perhaps through taking costs out of the deployment in the way Hackett has publicly suggested.
It’s obviously an angle Hackett will consider. However, I would encourage the executive, and readers as well, to remember that the Internode founder will likely have only a small amount of input into that large decision, at least in the short to medium term. The FTTN/FTTP mix will likely come out of a decision made by Turnbull as a result of NBN Co’s Strategic Review, due to be delivered in only a few short weeks. Hackett will be able to have only very limited impact on that review and on the FTTN/FTTP and even FTTB mix in the short-term. Meanwhile, there are other aspects of NBN Co’s network deployment and operations which are more important than rollout ideology. In the long-term, that avenue may open up. In the meantime, Hackett’s role is broadly to support the Coalition’s vision.
In general, I suspect that Simon Hackett will be a radically different board director at NBN Co than the previous directors the company had under Labor. Most of those executives were consummate professionals from outside the telco sector. They appear to have done a competent job on NBN Co’s board in general, but did not stop the project going off the rails.
I believe that Hackett specifically, and very likely Justin Milne and Patrick Flannigan as well, will take a much more activist approach. The trio has not been hired to sit on their asses and read monthly reports generated by NBN Co to reassure them that everything is OK. They have been hired for their specific skills and experience and will be required to use that background for NBN Co’s benefit. I expect to see Hackett, in particular, ramp up his engagement with NBN Co, especially informally and behind the scenes, over the next year or so as the project is reshaped by the Coalition.
Of course, all of these are just suggestions. Hackett is one of the most independent minds in Australia’s telecommunications sector and will, no doubt, find his feet on NBN Co’s board very quickly and get involved in the areas he can most make a difference or is just most interested in. History suggests that this will be a very good thing. Australia’s modern broadband scene is largely a creation of a handful of key players, Hackett, iiNet’s Michael Malone, TPG’s David Teoh and also Justin Milne among them. It will be fascinating to see what impact Hackett’s vision will have on this critical second phase of broadband delivery in our great nation.