News that the CEO of the federal government’s National Broadband Network company, Mike Quigley, will pocket upwards of $2 million per year has raised questions whether the cost of running the company may reduce the deployment of broadband services across Australia.
With the $43 billion NBN due to be fully operational in eight years time, the salary package for Quigley could reach the $16 million mark before the national infrastructure project is complete.
BuddeComm director and telecommunications analyst Paul Budde said the public needs to be vigilant that the NBN Co doesn’t end up being a “pork barreling bureaucracy”, but thinks the government was left with little option but to build the fibre network.
To put $16 million in context, Internode announced in June it was spending $10 million on enabling ADSL2+ in 57 additional telephone exchanges over 12 months, increasing the number of available broadband ports it manages to nearly 100,000.
“The last thing we want is a bureaucratic nightmare, but you have to start somewhere,” Budde said. “The appointment of a CEO is a logical step. If Telstra had taken the initiative years ago we might never have ended up in this situation.”
The CEO is only one of an estimated 25,000 to 50,000 people who will be employed by the NBN Co. If NBN workers were paid a conservative figure of $50,000 per year, eight years of wages could easily run into billions.
“We have to vigilant that it doesn’t become a bureaucracy, that it doesn’t become pork barreling - then it would be a disaster. But there is a reason why we are here. We should not be critical for no reason.”
Budde agrees the cost to start the NBN company will be high, but the alternative is “very high prices”.
“I’m happy to spend a billion in government money to break the monopoly,” he said. “The NBN Co will be an infrastructure company and that’s what we want, not a vertically integrated company. It should be a utility that we can use for any application.”
Regarding CEO Quigley’s remuneration, Budde said: “If you pay peanuts you get monkeys”.
“Whoever does this, it has to be done properly. A commercial organisation would not find a CEO for $50,000 so I’m not too worried about it.”
The leader of the opposition in the Senate and shadow minister for broadband, communications and the digital economy, Senator Nick Minchin, launched a scathing attack on Quigley’s $1.95 million salary, saying it was “reckless spending”.
“The $1.95 million that Quigley is to be paid comes on top of the $450,000 per annum that will be paid to the five other directors of this NBN company, which is currently little more than an empty vessel,” Minchin said.
“This NBN company is a $2 government entity, with no employees, doesn’t sell any goods and services to anyone, so why should its chairman be receiving $1.95 million?”
Minchin said this is the type of remuneration afforded to the CEOs of successful, long established companies, not “$2 companies with nothing yet to do”.
Back in April when the decision to go it alone and build the NBN from scratch was announced, TechWorld ran a blog about how creating a new organisation will invariably result in a bigger bureaucracy.
According to Budde, some 75 per cent of Australians have access to first-generation broadband, and with fibre to the premises taking up to 10-15 years, people at the end of the line don’t have to wait as interim solutions like wireless are available.
“In that situation areas which cannot be serviced in three years should get an interim solution and that may be WiMax. And in 10 yerars that solution may need to be replaced,” he said.
“People that live next to an exchange are not the people who have the greatest problem. Those that live away from an exchange won’t get high-speed DSL anyway as copper is not sustainable for high-speed Internet.”
Adam Internet in Adelaide recently announced a partnership with the federal and South Australia governments to build a $3 million WiMax network to bring broadband to some 350 known blackspot locations across Adelaide.
Whether the cost of running the NBN will detract from such remedial broadband projects remains to be seen.
“The reality is if you don’t come up with a sound business plan there won’t be an NBN,” Budde said. “This is a nationwide project like the Snowy Mountains Scheme or the Sydney Olympics – the last thing you want to do is run it on a shoestring.”
The Federal Government announced the appointment of Quigley as executive chairman of the NBN Co in July.
-- with Tim Lohman