It’s hard to imagine how things could have gone worse for Malcolm Turnbull in his first three months as Communications Minister. With the public rapidly turning on the Earl of Wentworth over his horribly unpopular new NBN policy, a growing perception that he’s stacking NBN Co with partisan staff and a lack of transparency verging on the hypocritical, it’s hard to find positives for the Earl of Wentworth from his initial period in office. Turnbull is truly fumbling the catch on both political and functional levels.
A little over three months ago, as the Coalition appeared set to win the September Federal Election and Shadow Communications Minister Malcolm Turnbull appeared set to take over the Communications portfolio under a newly appointed Prime Minister Tony Abbott, your writer published a detailed examination of what Turnbull’s first 100 days in the role would look like.
As I wrote at the time, Turnbull’s first 100 days in power would be critical for the new Communications Minister. Not only is much foundational work set in place in that period for any new Minister that will underpin the next several years of policy delivery, but Turnbull also had a number of specific deadlines that he needed to hit in his first three months in office as well as in his first three years.
The Earl of Wentworth could simply not afford to sit around twiddling his thumbs in this critical first period in power; he needed to take decisive action from day one if he was to deliver on the massive policy agenda in his portfolio which the Coalition laid out before the election — as well as just getting on with day to day government business.
And being honest about Turnbull’s situation, it’s not just the fortunes of the Coalition which are riding on Turnbull’s ability to accelerate right from the start of his term in power.
The National Broadband Network — the major project in Turnbull’s portfolio — is not just a project which is important to the technology sector. It is fundamental infrastructure which will underpin the whole future of the Australian economy and the public sector. Technology is an enabler and a driver of innovation, new businesses and business models and productivity. Australia has suffered from poor telecommunications infrastructure for many years — and our productivity and innovation has suffered as a result.
The nation needs the NBN project to rapidly progress — under the Coalition or under Labor, using a Fibre to the Node model or a Fibre to the Premises model — or else, as the Commonwealth Scientific and Industrial Research Organisation wrote in a report last week, we will continue to lag behind in terms of the benefits such infrastructure is delivering globally. That much is obvious to anyone right now who can’t get a decent videoconference session going from their home office — and that’s a lot of people.
When I catalogued Turnbull’s most important tasks during his first three months in office, I ended up concluding that the new Minister would have a gargantuan task ahead of him just to do what he said he would. As i wrote at the time:
“The key thing to understand here is that the first three months of Turnbull’s time in office are going to be excruciating. There is just so much here that the Earl of Wentworth has signed up to get done, and so much of it is foundational work that will underpin everything else the Coalition wants to get done in the three years following. I hope Turnbull’s not exhausted from the election campaign. Because he will need every shred of energy to keep his policy agenda on track.”
We’re now almost three months in. So how has Turnbull delivered on the laundry list of action items which your writer drew up for the new Minister? The truth is that while Turnbull has hit some of his targets, he has abjectly missed others; and even those actions he has taken have been tainted by partisanship that has rubbed much of the Australian population the wrong way. The past 100 days have not been good to Australia’s new Communications Minister.
Getting down to detail
The most important thing which Turnbull needed to accomplish immediately upon taking office was to find new management for the National Broadband Network Company. Given the past history of acrimony between the Liberal MP and NBN Co’s senior management (which continues to this day), there is no doubt that Turnbull needed new hands on deck at the company. It is doubtful that NBN Co’s previous chief executive and board could have worked with a Minister who so obviously believed in their incompetence.
On a surface level, Turnbull has delivered on this item. Shortly after taking office, as expected, he asked most of NBN Co’s board to resign. And also as expected, he appointed former Telstra and Optus chief executive officer Ziggy Switkowski as NBN Co’s new executive chairman, with Switkowski holding both board and executive duties until a new permanent chief executive could be found for NBN Co to replace outgoing CEO Mike Quigley. That CEO was announced this week and will start next year; in the form of Vodafone Australia chief Bill Morrow.
Turnbull has also made several other appointments to NBN Co’s board: Internode founder Simon Hackett, former BigPond and OzEmail chief Justin Milne and construction expert Patrick Flannigan. And the executivel has also made several significant appointments to NBN Co’s executive team, in the form of a new chief operating officer, Telstra’s Greg Adcock, and another former Telstra executive, JB Rousselot.
Now, out of this list of appointments, there are a couple of gems. Executives such as Bill Morrow and Simon Hackett are extremely well-regarded in Australia’s telecommunications industry, and can be expected to serve NBN Co competently and in an independently-minded fashion. Turnbull’s move to retain several of NBN Co’s existing directors — Kerry Schott and Alison Lansley — is also a good move. Both are well-regarded and have experience relevant to the NBN rollout. Their continued presence on the NBN board will provide stability. The appointment of Patrick Flannigan is also a winner, given Flannigan’s huge amount of experience in construction and familiarity with NBN Co itself.
However, with respect to the other appointments, Turnbull appears to have shot himself in the foot politically and somewhat functionally.
Now, it’s possible to argue — and many commentators have done so — that not all of these appointments were appropriate. There is substantial evidence that quite a few of Turnbull’s appointees were perhaps inappropriately approached for NBN Co roles prior to the election, and also substantial evidence that some have strong links to either Turnbull personally or the Liberal Party. Then too, not all of the appointees have ideal experience. Switkowski, for example, has not worked in the telecommunications industry for almost a decade.
Debate continues over issues such as the fact that NBN Co’s new head of strategy and transformation JB Rousselot has a long personal history with Turnbull — even owning a boat together — and that new NBN board member Justin Milne also has decade-long links to Turnbull personally. Even Switkowski has been reported to have close ties with the Liberal Party.
Then too, Switkowski has already made the position redundant of the one NBN Co executive who has too obvious links to the Australian Labor Party — Mike Kaiser. Such moves give off a distinct air of partisan politics that the Opposition is already exploiting.
Federal Labor on Wednesday this week highlighted the minister’s co-ownership of a yacht with Rousselot. “Given this fact, how can we believe anything that this report says?” Shadow Communications Minister Jason Clare asked. The public is entitled to ask the same thing, especially as NBN Co’s Strategic Review released this week is extremely critical of Labor’s existing NBN policy.
When it comes to other urgent steps Turnbull needed to take during his first 100 days as Communications Minister, the Liberal MP has also failed to deliver, or made missteps.
NBN Co didn’t formally publish its 2013 Corporate Plan, as Turnbull had been constantly agitating for prior to the election. This might have been largely taken care of anyway, as Turnbull pointed out, by a Financial Review leak shortly after the new Communications Minister took office. However, it would have been nice to see Turnbull formally release a document he had lambasted Labor for holding onto. NBN Co did publish its unembellished annual report, but Turnbull took the extraordinary step of adding a subsidiary document calling the annual report into question.
When the Coalition released its rival NBN policy in April this year, Turnbull promised he would deliver four reviews into the NBN situation. The first, the NBN Co Strategic Review, would review NBN Co’s rollout progress and costs, structure, internal capabilities, commercial prospects and strategic options. The second would be an audit to examine the public policy process which led to the NBN policy, as well as NBN Co’s governance. The third would be an independent cost/benefit analysis and review of regulation in the telco sector, while the fourth would be conducted by the Department of Communications and would audit Australia’s existing broadband capabilities.
All of these four reviews are suffering issues. NBN Co’s Strategic Review, published this week (and available online in PDF format), landed Turnbull a massive amount of negative media. It highlighted the fact that the Coalition’s NBN policy was not possible to deliver on-time or on-budget. But its worst recommendation — a recommendation which is currently seeing Turnbull ridiculed by even generally Coalition-positive newspapers such as the Financial Review — is its abandonment of support for NBN network construction in areas served by HFC cable networks.
As Delimiter has chronicled, this abandonment essentially means up to a third of Australian premises will receive very little upgrade to their current broadband infrastructure. And that’s not what Turnbull promised the nation when the Coalition’s NBN policy was released in April.
Additionally, it does not appear as though NBN Co’s new ‘Optimised MTM mix’ as laid out in the Strategic Review is currently possible to deliver, based on the company’s current commercial relationships and the state of Australia’s technology sector. A large number of premises currently covered by the HFC cable footprint, which NBN Co is planning to use to provide broadband to some 30 percent of metropolitan Australian premises, cannot connect to the HFC cable networks, as they live in so-called multi-dwelling units such as apartment blocks, or work in office environments where multiple offices are in the same facility.
Neither Telstra nor Optus are currently willing to connect such facilities to HFC cable unless the whole building is connected; something most landlords are currently unwilling to pay for. This will mean residents and business users in those areas will likely remain using ADSL2+ technology, which typically only delivers speeds of up to 16Mbps. Theoretically it can go a little higher — up to 25Mbps, but few Australian users see such speeds in practice, even if they are close to their local telephone exchange. The overwhelming of Australians in the HFC cable footprint are not using the technology, due to its inflexibility and cost, and the inability of many to get it connected.
Secondly, the HFC cable networks operated by Telstra and Optus are not open to wholesale access and are not regulated for price. NBN Co cannot currently provide Internet services over such networks unless the ACCC or the Parliament forces Telstra and Optus to open their HFC networks, or to sell that infrastructure to NBN Co. Neither Communications Minister Malcolm Turnbull nor Switkowski were able to answer questions this morning on how NBN Co would gain and control access to such networks, or how it would force Telstra and Optus to offer certain prices on the networks.
In a press conference yesterday, Turnbull wouldn’t answer questions on how the Coalition would deal with the HFC issue.
In addition, two of the reviews which Turnbull promised — the review of NBN Co’s formation and governance, or the cost/benefit review into broadband use in Australia — are going ahead. We’ve seen very little action on this front from Turnbull, and the Minister must be called on that.
Of those two reviews, the review of NBN Co’s formation and governance can safely be abandoned. It was likely included in the Coalition’s NBN policy document as a bit of a safeguard against Labor in the portfolio; a document that, once created, could be used to beat Labor around the head with at any given opportunity as a sordid history of the party’s NBN failures. There is probably little need for it now, with the Strategic Review likely to serve some of the same purposes. Labor’s NBN failures are well-documented. We can probably expect Turnbull to quietly back away from this one.
But the failure of Turnbull to kick off a cost/benefit analysis into broadband use in Australia is not so simple. This review must be conducted. When in Opposition, the Member for Wentworth hounded Labor constantly about the fact that it had not conducted a formal cost/benefit analysis for the NBN. And it will likely also actually have some objective value. The document should be a very useful, independent document which will help put paid to the incessant political debates about the worth of super-fast broadband use in Australia. Turnbull must kick this review into action shortly.
In terms of NBN Co’s construction progress, as the Coalition’s NBN policy featured a radically different model to Labor’s, Turnbull had to necessarily direct NBN Co to temporarily stop signing new construction deals, as well as ceasing new FTTP construction in new areas. Turnbull did this through the interim NBN Statement of Expectations letter issued to the company in partnership with Finance Minister Mathias Cormann.
This was expected. But what wasn’t expected was the radical change made to NBN Co’s map showing where its infrastructure lies now and will lie in future. It’s true that NBN Co’s map was already horribly inaccurate due to the construction delays suffered by the project under Labor. But the Coalition’s drastic changes to the map went too far, creating the public impression that the Coalition had literally ripped the NBN’s fibre out from under many Australians’ legs.
In our August article I wrote that NBN Co would necessarily need to re-evaluate all of its major contracts with both equipment vendors and construction companies, with a view to modifying them to fit along FTTN, and not FTTP lines. To a certain extent this is definitely happening. Turnbull has already been playing hardball with some contractors with obvious problems, such as Visionstream in Tasmania, and NBN Co executive chairman Ziggy Switkowski has also stated he is speaking individually to suppliers.
However, again in some areas Turnbull has made missteps. Before the election, the Liberal MP pledged to review the long-standing ban on Chinese networking vendor Huawei participating in NBN contracts due to national security concerns. That ban was indeed reviewed, with the Government opting to maintain it. While your writer personally disagrees with the decision, it’s the Government’s right to make that decision.
But the way in which the decision was made — with key Ministers such as Turnbull and Attorney-General George Brandis publicly squabbling over the decision and forcing Prime Minister Tony Abbott to step in — was, to most people, a display of how poorly coordinated the new Cabinet was. Some, such as your writer, believe it’s possible the whole process was cynically orchestrated to serve different Cabinet agendas. But however it was done, the optics were not good; and the lack of Huawei’s cheaper networking equipment in the NBN process can only keep the project’s costs high. Virtually every other telco in Australia is using Huawei gear right now — but not NBN Co.
The list grows larger
There are also some rather obvious other areas where Turnbull has not made progress. The next major area which Turnbull may have failed on is NBN Co’s renewed negotiations with Telstra to gain access to Telstra’s copper network. As I wrote in August:
“NBN Co must get Telstra to agree to give NBN Co access to its copper network from streetside ‘nodes’ to premises, as well as a range of other measures such as continuing to operate its HFC cable network and possibly even opening the HFC to competitive access or selling it to NBN Co. Under any scenario, Telstra will continue to operate and maintain a portion of its copper network.
This model — where a FTTN network is shared between a government company and former incumbent telco — hasn’t really been implemented anywhere in the world, and it’s not clear precisely how it will work. Will Telstra sell its copper to NBN Co? Will it sell access to the copper? Will it reject any attempt by the Government to keep Telstra operating its HFC cable network? Will it sell its South Brisbane fibre area to NBN Co? At this stage, nobody knows. But Turnbull must get NBN Co to get this new deal done — quickly, within existing cost structures, and without much fuss on either side.
This will be Turnbull’s most important undertaking as Minister, and it will kick off within the first several weeks of the Liberal MP taking office. It will be an incredibly hard and gruelling piece of work. At this stage, most industry observers expect it to take a great deal of time to get done — time which the Viscount of Vaucluse does not have, if he wants to get NBN Co focused quickly on a fibre to the node rollout.”
We know the Telstra negotiations have started. But there is no indication that they have gotten very far. NBN Co normally leaks like a sieve, but there has been no news from any party about Telstra and NBN Co having made progress on these talks. This is a very serious issue for Turnbull. One hopes that the talks are actively progressing behind the scenes. Possibly the talks were awaiting the results of NBN Co’s Strategic Review. If so, that’s three months which Turnbull can ill afford to lose from the negotiation timetable.
There are also other holes. During the election campaign, Turnbull and Abbott announced a $100 million policy to tackle mobile blackspots. We haven’t seen anything about that from Turnbull since. Neither have we seen any leadership from the Minister relating to the fact that Telstra is currently killing off Vodafone (and mobile competition in Australia with it), a situation which is likely to be exacerbated by the departure of Bill Morrow to lead NBN Co. With Morrow will go much of Vodafone’s turnaround credibility.
We haven’t seen any action on the limited Internet filtering/Section 313 notice scheme which plagued former Communications Minister Stephen Conroy’s last few months in office and resulted in thousands of websites being wrongly blocked. The Department of Communications has been extremely slow to respond to a Freedom of Information request on the issue.
Turnbull has also had the option of seeking to address some of the concerns the Australian public has about surveillance overreach; an issue which the MP was active on in Opposition. But we have come to expect political apathy on these issues from both sides; Turnbull has left the issue alone completely.
When it comes to transparency, Turnbull has also faltered. The Minister has regularly called for Labor to release sensitive NBN-related Cabinet documents considered during the Rudd and Gillard administrations. But Turnbull has declined to release his own sensitive documents — particularly his incoming ministerial briefing, which is subject to numerous Freedom of Information requests. This lack of transparency has had its own string of effects, with some of the information which informed the incoming ministerial briefing making its way into the public domain regardless, through a string of leaks about an internal NBN Co document criticising the Coalition’s April 2013 NBN policy.
This week Labor got hold of the document and tried to table it in Federal Parliament. The Coalition blocked it, but the document was since handed to the media. Delimiter has published it online.
The document analyses the Coalition’s NBN policy in detail and raises significant concerns about its viability in a number of areas, highlighting numerous legislative, construction and technical challenges which NBN Co believes are likely to blow out the Coalition’s 2016 and 2019 delivery deadlines.
The NBN Co analysis details NBN Co’s belief that the Fibre to the Node technology preferred by the Coalition will require a significantly higher degree of skills to deploy than Labor’s preferred Fibre to the Premises model, that the associated IT systems are considered “high risk”, that NBN Co cannot guarantee FTTN can deliver the Coalition’s planned 50Mbps minimum speeds, amid other concerns.
Taken with this week’s NBN Co Strategic Review, NBN Co’s FTTN analysis represents a killer for Turnbull. The two documents paint an awful picture of the future of the Coalition’s NBN approach and years’ worth of headaches for Turnbull personally. Even if the vision outlined in the NBN Co Strategic Review is successfully delivered, it will still result in a patchwork of networks, network technologies and commercial relationships which will dog the Government for years to come. Labor’s more simple and elegant FTTP model, poorly delivered though it was, is looking increasingly more viable, and is certainly gaining in popularity with the electorate.
That electorate, by the way, has started to take arms against the Coalition on the issue, with hundreds of pro-FTTP campaigners turning up at MP’s electorate offices late last month to present them with copies of a 270,000-strong petition in the area. They’ve even crowdfunded advertisements in Turnbull’s local newspaper. We haven’t seen such moves in other portfolios since the Coalition took Government; Many Coalition MPs would rightfully be asking Turnbull about now what the hell is going on.
The news isn’t all bad, of course. There are some positive steps which Turnbull has taken as Communications Minister. For starters, the Member for Wentworth has ordered NBN Co to be significantly more transparent; releasing its rollout statistics each week. This was a sore spot which Labor never addressed, which the new Minister took action on immediately.
Turnbull has also immediately freed up NBN Co from one of the main encumbrances blocking its ability to rapidly deploy its network to end users. Under the previous Labor administration, NBN Co was forced to deploy fibre directly to every apartment building or office in so-called multi-dwelling units such as apartments or individual offices in office blocks; even individual shops in shopping centres. Because of Turnbull’s permission for the company to experiment with different network rollout methods, NBN Co currently trialling a Fibre to the Basement model which will re-use internal copper wiring inside such MDU buildings — delivering very fast broadband speeds, even up to 100Mbps, to the individual units inside such buildings and dramatically speeding up its rollout.
In general, there’s been a lot of flack in the media about Turnbull “slowing down” the NBN rollout. However, if you look at the actions the Minister has actually taken — allowing existing FTTP construction to go ahead (even allowing new construction to start to a further 150,000 premises) and opening up the NBN’s rollout schema to Fibre to the Basement options, it seems likely that Turnbull is at least keeping the NBN rollout going apace. In the short to medium term, it seems likely the moves he has taken already will help speed up the network’s deployment. It’s the long-term — when NBN Co’s new Strategic Review options start to kick in — that most people are worried about.
But these are minor successes in a long string of controversies and failures. They are very much the exceptions, not the rule.
In the first few months after a new Government takes power, it should be able to expect a honeymoon period for some time. It should take at least that long for the optimism which the electorate feels about electing a new Government to wear off.
However, in the Communications portfolio, new Minister Malcolm Turnbull has not experienced this. Not only did the electorate turn on the Minister from the start with respect to the Coalition’s unpopular NBN policy, but Turnbull has continually worsened the situation by making a series of political blunders. From making appointments perceived as partisan to demonstrating hypocrisy when it comes to transparency and treating the populist pro-FTTP movement with disdain, it’s clear that Turnbull’s personal stakes are rapidly slipping at the moment. And down with them goes the Abbott administration’s credibility on the issue of broadband and the communications portfolio in general.
Functionally, Turnbull has also failed to deliver. NBN Co’s Strategic Review delivered yesterday was a disaster for the Minister, he has failed to make progress on several of the other reviews the electorate was promised, and in the long-term, the nation can look forward to a highly inconstent and problematic network of many different technologies that many no longer believe can be truly described as a “National” Broadband Network. Many people, due to a series of leaks and ongoing analysis, don’t even believe Turnbull’s current NBN policy to be viable.
It’s quite hard, at this point, to imagine what Turnbull could have possibly done to make his situation worse over the first 100 days he’s been in power. Adopt a mandatory Internet filtering policy, perhaps, as Labor did? Abandon the NBN project wholesale? Because from where the Minister stands at the moment, his credibility is rapidly heading south.
It’s far from clear what steps Turnbull must take to extricate himself from the mess he currently finds himself in. But one thing is clear. The Minister must start listening to the Australian public about what they want in terms of the NBN. The alternative is to currently a wholesale slide towards disaster. It’s been a while since Australia’s seen a sitting Communications Minister removed from office. But such a possibility is far from remote if the Member for Wentworth continues down his current path. On the positive side, that eventuality is getting more desirable in the eyes of the Australian public every day.