What went wrong for Labor's NBN

The National Broadband Network (NBN) should have been a powerful political weapon for Labor in this year’s Federal election, the fact that it wasn’t tells us much about Australian politics and NBN Co’s flawed management.

Some of the credit for moving the NBN off the political agenda should be given to Malcolm Turnbull, who successfully dragged the Liberal Party into the Twenty-first century and offered a credible, albeit inferior, alternative to Labor’s grand project.

Despite the Coalition’s plan being inferior, Labor failed to take the political high ground due to the project’s poor execution, which featured management failings, inept communications and missed deadlines.

Most damning for the project’s management are the rollout statistics. In NBN Co’s 2010 business plan, 1.7 million premises were forecast to have been passed by the end of the 2013 financial year, instead only 484,000 were – 28 per cent of the original target.

The ‘premises passed’ statistic actually compliments NBN Co as by the end of June 2013 only 23,000 customers had been connected to the fibre network instead of the half million originally projected.

So what went wrong with the National Broadband Network – a project that delivered Labor government in 2010 and still remains popular with voters, regional Australians and business people?

Mis-selling the message

One of the most notable failures was the government and NBN Co’s inability to sell a project that had largely sold itself. As Neerav Bhatt pointed out last week in reviewing the rollout of Google Fiber, NBN Co has been spectacularly unsuccessful in engaging the community and creating a buzz around the project in the same way the search engine giant has in Kansas City.

One particularly baffling part of NBN Co’s failure to engage has been the reluctance of CEO Mike Quigley to directly talk to the community. In person, Quigley is an articulate, convincing speaker, however, he was unwilling or unable to be the public face of the project.

That reluctance of senior management to engage the general public left the task of being the project’s figurehead with communications minister Steven Conroy which had the effect of politicising the venture further.

The wrong executive team

Ultimately the problem of poor communications and missed milestones were directly due to management failings and as the first chairman and current CEO, Mike Quigley has to accept a large measure of responsibility for this.

Mike Quigley is an extremely talented, world class manager with global experience and hopefully the incoming Liberal government will find a role for him that will give Australia the continued benefit of his skills.

Unfortunately, being responsible for building the NBN was not the role he was suited for.

Quigley’s hands-off management style was the opposite of what was needed in establishing a new telecommunications company. Worse still was his lack of understanding of civil engineering and construction management, essential for a project that involves connecting millions of homes and offices around the nation.

A regular mantra from Quigley and his executive team was the broadband rollout would be a rote task ‘like flipping hamburgers’ and often parallels were drawn between the project and the submarine cable factory Alcatel Lucent built in Sydney during the 1990s.

Confusing building a factory or making hamburgers with a nationwide civil engineering project was an early indicator that Quigley’s management team had little inkling of the complexity of the task it was undertaking.

Ultimately this lack of understanding resulted in vital construction tenders being abandoned in February 2011 and NBN Co deciding to go a ‘different route’.

That different route proved to be disastrous for the project with contractors failing to deliver, chronic logistics problems and subcontractors protesting over outstanding payments.

Poor recruiting practices

Just as NBN Co struggled with managing its contractors, a similar problem affected internal recruitment, as the company’s middle management focused on candidates’ position in their industry’s mates networks rather than the suitability for the role.

This narrow thinking – a problem not exclusive to NBN Co in Australia’s corporate sector – resulted in many departments of the organisation being dominated by narrow groups of long established cronies rather than the best team to do the job.

Ultimately, a ‘dog ate my homework’ mentality infected the company as targets were repeatedly missed. An example of the company’s widespread culture of mediocrity is the updated business plan due in May 2013, that still remains outstanding in September.

A lost board

As has been explored before, many of NBN Co’s failures have stemmed from the board failing to supervise the business properly, partly due to the directors’ lack of construction experience.

The board’s decision to hire political lobbyists to curry favour with the opposition before the election was a new low in the running of Australian government owned corporations and as a result most of the NBN Co directors are in an untenable position.

One of the key tasks facing Malcolm Turnbull in getting the project on track is to rejuvenate the board with directors who have the skills appropriate to supervising the management of such an expensive, complex and vital project.

Ministerial thought bubbles

While much of the responsibility for the National Broadband project running off the rails has to be borne by the board and senior management, ultimately the blame for the NBN’s poor execution has to lie at the feet of the then Prime Minister Kevin Rudd and his Communications Minister Steven Conroy.

Urban legend has it the idea for the project was sketched out on a napkin – this writer has been told it was written on a drinks coaster in the Canberra Qantas Chairman’s Lounge – but whatever the truth is, the NBN suffered from being poorly thought out at the beginning.

A failure to properly scope the project enabled the opposition to deride the questionable assumptions on which the scheme was based upon, it also meant that serious questions of funding, governance and competition policy were overlooked.

The ongoing debacle of the Special Access Undertaking, the SAU, is an indication of ‘policy as a thought bubble’. Access rights and competition implications are something that should have been addressed early in the project, instead of dragging on four years into the project.

Thought bubbles masquerading as policy has become a mark of modern Australian governments. While the Gillard and Rudd governments made this into an art form, Liberal state governments, particularly the NSW O’Farrell government, have shown themselves to be quite capable of floating bizarre schemes born in ministerial advisers’ fevered minds.

In this respect Turnbull’s promise of an independent review of the policy process that led to Labor’s NBN is welcome, however, the opposition’s internet filtering gaffe during the final days of the election campaign is a worrying sign that the Abbott government may be as prone to ‘thought bubbles’ as its predecessor. 

It should not be forgotten that the need for the NBN was born out of thirty years of poorly conceived policies by both Liberal and Labor Federal governments that left large swathes of suburban and regional Australia with substandard communications.

While the incoming Prime Minister might see road building as being the future, for the rest of the world the future lies in communications. How the incoming Federal government manages the NBN could well define Australia’s role in the 21st Century.