NBN Co

Budget Estimates Thursday 30 May 2013 - Environment and Communications Committee

Senator LUDLAM: I suspect we may come back to this issue later in the evening. I just want to turn to some of the other issues that you mentioned in your opening statement but also come to the issues of contractors and subcontractors, because it is one of the things that was also blamed when the company suffered pretty significant delays that were announced between last December and whenever we were last in Sydney, in March or April. You mentioned a number of 3,650 contractors that had done safety training. Is that the total compliment of sub-contractors working through various companies for NBN Co?

Mr Quigley : I cannot give you the exact number, but our aim is to put every single contractor and subcontractor who works on the NBN through those courses, so I think it would be very close to that number. Obviously, day by day it changes, but that would be roughly the number.

Mr Steffens : Correct.

Senator LUDLAM: How many of those are on 457 visas? Do you have any figures on that?

Mr Quigley : I do not know. I would have to take that one on notice.

Senator LUDLAM: Are you likely to be able to find out? I guess I cannot ask you to judge likeliness, but would your top-tier contractors have that information? If they do, do you know whether they would pass that on to NBN Co?

Mr Quigley : I would have to take that on notice. I do know that there have been some specialised skills that have come in from overseas. For example, ribbon splicing would be an area.

Senator LUDLAM: I could understand why that was the case, because I do not imagine there was a very big jobs market for that in Australia until you turned up.

Senator Conroy: I think we were the first to deploy ribbon fibre.

Senator LUDLAM: There is a lot of skilled labour involved here; there is also a lot of semiskilled labour. Across what categories would you be able to identify the proportion of your workforce that is on those visas?

Mr Quigley : I do not have that-

Senator LUDLAM: I understand you do not have it at the table.

Mr Quigley : We will take it on notice.

Senator LUDLAM: Thanks. Could you just step us through some of the issues that you worked through in your opening presentation: slide 4, the take-up rate by FSAM. Am I reading that graph of averages right, that it would tend to indicate that the uptake in the trial sites has actually been quite a bit slower? Is it a volume rollout?

Mr Quigley : That is the case. They are the three Tasmanian sites.

Senator LUDLAM: Yes. What do you put that down to?

Senator Conroy: We started in the toughest state and in the toughest regions in the toughest state. It was one of the reasons we started there. Going right back to the very beginning, the Tasmanian government wanted to put their hand up to be part of it from the beginning, but we chose some of the toughest spots. Back when we started, in 2007-08, Tasmania only had one-third of the state using broadband. In other words, two-thirds potentially, if they wanted to get on the internet, used dialup. So when we started it was the toughest. Back in 2009-10, the debate that we are having today about broadband was very much in its infancy, and so the public knowledge and understanding of what the NBN could bring was probably, I think it is fair to say, a lot lower than it is today. We have had four years of fairly heated public debate. As you can see from the figures, as we open new areas the knowledge and understand of what the NBN can bring to Australian businesses, homes et cetera is showing an ever-increasing demand.

Senator LUDLAM: I guess that seems reasonable. The first release site graph is also much more shallow. The volume rollout is obviously trending at 45 degrees, so-if I am reading it right-that is a sign that the take-up has been much more rapid.

Mr Quigley : That is correct.

Senator LUDLAM: What is the explanation for the kink in the volume rollout, in the averages, between weeks 21 and 31? We actually go into-

Mr Quigley : That is just simply an artefact of the averaging. If you look at all the graph above and all the red lines, week by week we have averaged each take-up rate for each of those lines. So it is just an artefact of how the take-up rate went.

Mr Steffens : We released, at one point, a number of sites which had a zero per cent take-up rate. Hence, you see this little dent.

Senator Conroy: I could add to my answer earlier, Senator Ludlam. The sorts of examples that I am about to read did not exist back when we started the Tasmanian rollout sites. This is from Dave Laarhoven. He runs a small media and marketing business from home on NBN fibre in Coffs Harbour. In the Coffs Coast Advocate he said:

I'd say the NBN has improved my work efficiency and productivity for my business by between 100 and 200% ...

Senator LUDLAM: I think we are using estimates for advertising.

Senator Conroy: No. You asked a question about why it was low at the beginning and it is very high now, and I am giving you a reason why. He goes on to say:

A lot of the time I save through the NBN comes with far better speeds in downloading and uploading.

I have to video conference a lot in my line of work and there is no fracturing when I use Skype.

Senator LUDLAM: I guess I walked right into this one.

Senator Conroy: I am happy to stop there to allow you to keep questioning, but that sort of example did not exist when we started in Tasmania, in Scottsdale, Smithton and Midway Point.

Senator LUDLAM: Mr Quigley, would you expect to see that curve increase in steepness as you continue into the volume rollout or is this about as fast as you reckon the uptake is likely to get?

Mr Quigley : This is very rapid uptake. Compared to previous technologies-ADSL, HFC or even dial-up-and compared to take-up rates that other service providers, other telcos, see around the world, this is a very rapid rate now with those new sites. I would be, frankly, astonished if it went even faster than this. These are really quite spectacular take-up rates.

Senator Conroy: I will come back later to talk a little bit more about that, Senator Ludlam, but I will let you keep going.

Senator LUDLAM: When the joint NBN committee convened in Sydney six or eight weeks ago, it was right off the heels of a rather abrupt announcement that you figured you would be six months behind schedule by 2022 or whenever the build is likely to be completed, or you are six months behind schedule as of now and you will be on time and on target-

Mr Quigley : No, we are three months behind.

Senator LUDLAM: Do you consider that that is still accurate, that it still prevails?

Mr Quigley : Yes.

Senator LUDLAM: On slides 2 and 3, there are the curves and estimates that you provided for us. Last time, you provided the joint committee with the first accurate, or reasonably accurate, across a large sample size, estimate of cost for the different cohorts. You have not reproduced those-

Mr Quigley : We have not reproduced those. There is no additional substantial information that would change those. That is why we did not include them.

Senator LUDLAM: You also did not include my favourite, which is the user profile, being upside down compared to what was in your business plan.

Mr Quigley : Yes.

Senator LUDLAM: Do you have anything to report and are you-

Mr Quigley : No, other than it is variable. Remember, our long-term plan was that we expected the user profile to shift more to the lower end, where we had been predicting. I think we are seeing that as we see more and more people take up and see people move across from the copper. It will shift down, and we are seeing it shift down. It is still nowhere near where we project it to be in the long term, so it is still a bit upside down but not as upside down as it was before.

Senator LUDLAM: That is good. I will ask you-as I think I have done four or five times-are you going to end up having to recalculate your business case or the return to the taxpayer if those rates of uptake of the different user profiles prevail? It is a good story, but-

Mr Quigley : It is a good story. Still, it is very early days and we will stick with the numbers-

Senator LUDLAM: Engineers. One of the things that had caused fairly significant delays that we spoke of at that hearing in Sydney was fibre splicing that needed to be, basically, torn out of the ground and redone. I am probably using slightly lazy language here. Up to 30 per cent in some areas were found to be defective and were replaced.

Mr Quigley : That was not an average. That was not a number that NBN Co. talked about. That is a number that I think somebody else had reported that they had heard from someone in the field. We did not contradict it, because it is possible in some location. If someone were not trained properly, you may get a rework of that rate. That is not what we would expect to see in the long term and it is not what we are seeing in the long term. I do not know whether Mr Steffens would like to add to that.

Mr Steffens : We do not see that failure rate as an average at all. I was in the field only last week and spoke to an experience splicer. The failure rate is in the very low single digits. That is what you would expect from an experience splicer. If somebody is fresh on the job, you would expect a higher fault rate, but overall we expect and see fault rates in single digits.

Mr Quigley : Regarding the 32 per cent that was quoted, it might have been quoted for one instance in one place. We know of no-

Senator LUDLAM: I do not have a citation.

Senator Conroy: One team that was doing one specific area was having that sort of difficulty, but, as Mr Steffens has said, that is not an average or even representative.

Mr Quigley : We are obviously not going to tolerate that. We are getting better and better views on those types of measures; we would move in very rapidly if that were happening.

Senator LUDLAM: You have not reported anything on that issue on paper this time around, but do you feel as though the fault rate for those installations has fallen back to the industry average or to something that you feel happy to tolerate?

Mr Steffens : In general I would say yes, but since we are still adding a lot of additional resource onto the project, we are training a lot of splicers, the inexperience will continue-we will initially produce a higher fault rate, but we consistently see this fault rate coming down as they gain more experience. We obviously provide work opportunities for years to come for these people; therefore, the initial learning curve people are on, we are quite comfortable with.

Senator LUDLAM: All right. I will leave it there. Thank you all; I wish you well. I got to see the NBN truck the other day for the first time and it's great-bring it to WA!

Senator SINGH: Hear, hear! I agree.

Senator Conroy: You have had it in Tasmania a fair bit.

Senator LUDLAM: We have not had it in WA that much, and the people working on it clearly love their jobs. It looks like it would be great fun.