“Political hacks”: Conroy says NBN board responsible for Optus HFC disaster


news Former Communications Minister Stephen Conroy has accused the board of the NBN company of being “incompetent political hacks” who abrogated their responsibility in allowing the purchase of unfit networks such as Optus’ HFC cable infrastructure in an ill-fated attempt to ensure the Coalition’s Multi-Technology Mix model could be delivered.

Under Labor’s previous near-universal Fibre to the Premises model for the NBN, the HFC cable and copper networks owned by Telstra and Optus would have been shut down. However, the Coalition’s Multi-Technology Mix plan instituted by Malcolm Turnbull as Communications Minister in the Abbott administration is seeing them acquired and upgraded by the NBN company. In Optus’ case, the network buy came at a cost of some $800 million.

However, internal documents leaked this afternoon have revealed that the NBN company is considering overbuilding the Optus HFC cable network, in a move which dramatically validates long-standing criticism that the HFC cable technology could not meet Australia’s future broadband needs.

The documents — dated 3 November — openly state that Optus’ HFC network is “not fully fit for purpose”, with some Optus equipment “arriving at end of life” — needing to be “replaced”. Some Optus HFC nodes are “oversubscribed” compared with Telstra’s HFC cable network and would “require node splits”, while Optus’ cable modem termination systems don’t have “sufficient capacity to support NBN services”.

The document explicitly states that some 470,000 premises in the Optus HFC cable footprint would need to be overbuilt, with a significant impact to the NBN company’s peak funding requirement ranging between $150 million and $600 million. The document also explicitly states that the NBN company will miss its financial year 2017-2018 HFC ready for service target.

Speaking in the Senate this afternoon, Conroy — the architect of the original NBN project as Communications Minister in the Rudd and Gillard administrations — slammed what he called the “folly and lies of those who’ve been peddling the NBN MTM”.

“There’s a reason that we were going to close it down,” Conroy said regarding Optus’ HFC cable network. “Because it wasn’t fit for use.”

“We knew it, Optus knew it.”

“The whole country knew it, but not Prime Minister Turnbull. He decided he knew better than all of the engineers, all of the experts in the country, and Optus today are laughing all the way to the bank.”

Conroy said Turnbull had “no one to blame but himself”, adding: “Virtually every forecast that he has made on the NBN has been hopelessly wrong.”

The Senator also took aim at the NBN company’s board, which signed off on the company’s new MTM model after it was instituted following the NBN company’s Strategic Review in November 2013.

The development of the Strategic Review was administered by J. B. Rousselot, an executive who has close personal links with Malcolm Turnbull (including having worked with the Prime Minister at several companies, and reportedly co-owning a boat together). Rousselot was appointed to a senior role at the NBN company after Turnbull became Communications Minister after the Coalition won the September 2013 Federal Election.

On the NBN company’s board at that time were NBN chairman Ziggy Switkowski — who helped build the Optus and Telstra HFC cable networks during his time as chief executive of those two companies — as well as construction executive Patrick Flannigan, Internode founder Simon Hackett, lawyer and executive Alison Lansley, former BigPond and OzeMail executive Justin Milne, and long-serving corporate executive Kerry Schott.

Hackett has publicly stated that he had confidence in the HFC model for the NBN, although he has been more skeptical regarding the FTTN aspect of the MTM model.

Most of the board was appointed during Turnbull’s tenure as Communications Minister, with the exception of Schott and Lansley, who were appointed during Labor’s administration of the project.

NBN chief executive Bill Morrow joined the NBN company’s board when he took up his role on 2 April 2014.

“The board decided that they had the information needed, to change the direction of the National Broadband Network,” said Conroy. “They made [the decision] based on the Strategic Review.”

Morrow, Conroy pointed out, had recently acknowledged that the NBN company had made its decision to shift to the MTM model without a full knowledge of the detailed costs of re-using the HFC cable and copper networks.

Former NBN chief executive Mike Quigley recently released detailed analysis showing that the up to $15 billion blowout in the cost of the NBN was primarily due to the HFC cable and copper technologies being used as part of the MTM mix approach.

“Now we’re getting all of this debacle coming home to roost,” Conroy said the Senate this afternoon.

“How could a board make a decision to switch to a $56 billion network, without knowing the costs at the time? How can the CEO today say that the board members didn’t know the costs when the board made a decision to shift to a network that is now costing $56 billion?”

“This board were political hacks, they were incompetent, they did not know what they were doing.”


    • and good on them too, we need more whistle blowers in nbn ™ exposing the lies perpetrated by TurnBull and hidden behind a veil of CiC!!!

  1. I can only hope that the document in question was so broadly distributed within NBN Co that tracing the leaker is essentially impossible. More leaks like this would definitely be welcome.

  2. I’ll consider the debacle coming home to roost when the executives and Turnbull are found guilty of fraud, theft of public money, insider trading and corruption, and go to jail for the rest of their (un)natural lives. Anything less is a platitude.

    • Don’t worry, News Limited will spin the story so it’s all Conroy & Quigley’s fault, so that the shareholders (the voting public) will be misled once again, and the perpetrators will (at worst) get a golden handshake…

  3. Just wait until they figure out how useful or not the CAN they bought for 11 Billion is. well the little of it they plan to use anyway.

  4. This is precisely why I only considered buying houses in Telstra-HFC or optical-fiber serviced areas – anyone with any technical knowledge knows that Optus HFC is useless for high speed broadband (except perhaps between 1am and 7am!).

  5. Can we get Royal Commission to start looking into this? I think Turnbull and Co. should be charged for wasting taxpayers’ money.

  6. Conroy has a selectively short memory. On the 23rd June 2011, he signed an $800m contract with Optus to shut it down. The only difference now is that NBN has an asset to use where it sees fit.

    Biased much?

    • No, he paid Optus to move their broadband Customers to FTTP, Customers = Revenue.

      Buying an Obsolete poorly maintained HFC network buys you costs …. cost to repair, costs to run (OSP for HFC requires power), costs to upgrade and more costs in the future when you finally replace it with FTTP!

      In the USA they estimated that OSP powering alone can cost nearly $3 million yearly for an HFC network that passes 1 million homes and thats with cheaper US power costs etc.


    • Not much of an asset if your going to spend more “fixing” it than the cost of installing FTTP straight up when you add on the costs to integrate this pile of smouldering puss into the NBN software applications and the ongoing operational expenses of maintaining the decades old copper.

    • Conroy paid for the assets that were worth something and cost nothing (customers).

      MTM paid for assets that are not only worthless as it turns out (ie we told you so) but also comes with a very large maintenance bill as well as additional expense to replace.

      To fix only the part that isn’t overbuilt we’re looking at potentially double what the original deal was paying for the customers.

    • If memory serves, Conroy paid that to get access to the pits and ducts….Malcolm is the one that bought the actual lemon…

      • Not only that, under NBN co v1 Telstra were responsible for all pit and pipe remediation costs, under Turnbull’s MtM deal NBN now has to pay all the remediation costs!

        Turnbull is definitely Telstra’s very own Alan Bond!

  7. Does this now mean that the UPTO $15B blow out in MTM costs reported not so long ago, has again blown out to UPTO $20B?

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