NBN Co: “Accountable, frustrated and disappointed… but we will recover it”

Posted on: Thursday, 21st March 2013

NBN Co CEO Mike Quigley says the firm is “absolutely accountable, frustrated and disappointed” regarding the three-month delay it is now publicly anticipating to its fibre rollout.

But Quigley is also emphatic that he will recover the lost ground, with both NBN Co and its construction partners accelerating investment in tech and manpower – all, he says, without materially affecting the overall timeframe for the project or its total cost.

The network builder’s most recent corporate plan, released in August last year, set a target of passing 341,000 premises with fibre by the end of June 2013: 286,000 in brownfields estates and 55,000 in greenfields.

Now, following a board meeting, NBN Co is forecasting that it will pass a total of between 190,000 and 220,000 premises by that date: 155-175,000 in brownfields and 35-40,000 in greenfields. The firm estimates that it will deliver on the original fibre target about three months behind schedule.

At a press conference, Quigley suggested that the NBN was “not going too badly” considering the scope and decade-long timeframe of the project. “Having said that, we are absolutely accountable, frustrated and disappointed that the delay has taken place,” he said. “And as the CEO I am committed to recovering the delay.”

Quigley was at pains to emphasise that the delays were not due to a general lack of contractors available to work on the project at the rates offered by NBN Co and its prime contractors. “Essentially, some of our construction partners have not been mobilising the ‘boots on the ground’ at a local level at a fast enough rate to be able to meet their own forecasts,” he said. “This is not about labour rates, it’s not about labour shortages. There are enough workers in Australia to build this network.”

“It’s about our contractors putting the right people in the right place at the right time. Our public forecasts have always been underpinned by our commitments from our construction partners, who are the leading partners in the Australian construction industry.”

While NBN Co has taken responsibility for the Northern Territory rollout back from Syntheo, Quigley declined to discuss issues with specific prime contractors or the activation of any penalty clauses around the construction lag. He did, however, dispel rumours of pending legal action and stressed that NBN Co was engaging cooperatively with contractors to make up the delay.

Quigley said he was not expecting significant impact to revenues or the eventual peak rate of houses passed per day as a result of the setbacks, although NBN Co is now examining the longer-term impact. “We are looking at re-profiling the total project, and there may be some small adjustments. But I don’t want to talk about them today, because we’ve really got to go through that exercise,” he said. “It’s unlikely to change significantly, but I’ve got to do that re-profiling over the next couple of weeks.”

ACTIONS TO BE TAKEN: Quigley laid out a number of specific actions that NBN Co would now take to address the shortfall. As well as the NT takeover, which the firm says will see it create an additional 200 jobs at the peak of the rollout, NBN Co and its construction partners will also train and employ additional fibre splicers to help recover lost time. In addition, NBN Co said that its fibre construction contractors “will increase their investment in equipment and manpower as well as technology to accelerate on-the-ground design and planning.”

But NBN Co also says that the issue won’t affect the overall cost of the project. “What we’re seeing is the rate at which our construction partners are taking people on just isn’t fast enough – so it’s not a question of the total numbers of people being different, it’s how fast they’ve come on,” he told CommsDay. “When I’m talking about additional splicers, this something we’re seeing as a bottleneck, potentially, to recover the delay, so we’re going to take on new people… and in fact we’re using some internal people as a short-term kind of ‘tiger team’ for doing splicing, which we will drop into particular areas if that becomes a bottleneck.”

“[The costs of those] extra 80 people are really not in any way significant in the overall project.”

TURNBULL SLAMS TIMING: Shadow communications minister Malcolm Turnbull, meanwhile, was quick to attack NBN Co for making the announcement simultaneously with Labor’s abortive leadership spill, accusing Quigley of having “cynically used Labor’s latest leadership crisis to ‘take out the trash’ and avoid scrutiny of this announcement.”

Quigley, though, said that a previously scheduled board meeting concluded a couple of hours before the announcement had been necessary before the figures could be released. “I can assure you that the events taking place today had no connection at all to the process that we were going through,” he told the media.

NBN Co has also welcomed new chairperson Siobhan McKenna, previously a board member, who replaces retiring chair Harrison Young.

Petroc Wilton