Coalition could revoke Optus and Telstra NBN agreements

Malcolm Turnbull has continued to push the benefits of a fibre-to-the-node network

Malcolm Turnbull, shadow minister for communications and broadband, has said he would overturn existing National Broadband Network (NBN) agreements if a Coalition government was in power.

While Turnbull restated his stance that he would keep NBN Co as a government-owned company to run the NBN, he said he would retain the HFC network in order to remove “barriers to competition” with the NBN.

"...we would seek to reverse the arrangement whereby Telstra and Optus are obliged not to use their HFC to compete with NBN Co on broadband data and voice, the extent to which that is possible obviously depends on negotiation," he said.

This would involve changing million dollar agreements with Telstra and Optus around the telcos decommissioning their HFC networks and migrating customers to the NBN and would include reworking two key agreements in the NBN.

This includes an $11 billion agreement between Telstra and NBN Co, with Telstra to decommission its copper and HFC network and give access to NBN Co to its equipment, and an $800 million agreement between Optus and NBN Co for Optus to decommission its HFC network.

Instead, Turnbull would keep the HFC networks in operation. With Optus due to decommission its HFC network in 2014, the telco may not even begin the transition of customers to the NBN if the Coalition wins the next federal election, which could be held as early as August next year.

Turnbull said he would expect Telstra to co-operate with any changed agreements, with David Thodey, chief executive at Telstra, previously stating a change in government would not affect the company's financial figures.

“If there’s a change of government, the current contracts give us a degree of protection — there’s the infrastructure services agreement, which is a 35-year contract, and depending how far we get, we get the payout on that or we get the revenues as they flow,” Thodey said.

Thodey also stated this year that a FTTN deployment would mean shareholders receive a quicker return.

Turnbull has been a staunch opponent to NBN Co, stating that while it is not ideal to continue to operate the company if the Coalition were in power, he said there seemed to be no other option.

“…it has been and is probably unsaleable in its present state of development and for the forseeable future,” he said.

The shadow minister also continued to push the benefits of a fibre-to-the-node (FTTN) network over fibre-to-the-premises (FTTP) and has repeatedly said a FTTN network would be cheaper and faster to roll out.

“The experience in other markets (USA for example) is that FTTN networks enjoy comparable ARPUs to FTTP networks – the very high speeds (100 mbps plus) available on FTTP are not sought after by sufficient customers at sufficiently high premiums to justify the additional investment,” he said.

“That, at least, is the feedback I have had from telcos in the USA, UK, Canada and several other countries.”

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5 Comments

HUH

1

Slippery as per usual Mr Turnbull, but even by your standards this was pretty bad...
"“That, at least, is the feedback I have had from telcos in the USA, UK, Canada and several other countries"

While in a way this is true what Turnbull forgets to mention is the 15 year tech gap, FTTN was rolled out in the UK 20 years ago, and in various other countries 20 to 10 years ago, a the KEY point he missed is that now these countries are upgrading to FTTP.
Australia never learns a gawd dam thing in respect to catching up in what ever field you choose to pick, because it has to blindly follow a path others have laid out, instead of being able to see where it can take a large step forward in which to enable itself.

In a sense Australia is like the 3 kid of the family so used to hand me downs it never thinks anything of it.

However all that aside all this from Turnbull is a big pile of steaming crock, as this is an enabler to backhandedly stop most of the NBN contracts so they can scream they have made savings, when the educated in these matters knows that is not the case because of the nature of the funding.

Gary Khol

2

+1 bit of a long rant but I do see the point your making, and couldnt agree more.

I did feel sorry for Turnbull but the more he keeps trying to sell the 20 year old way of doing things, knowing full well there will be cries in 10 years further down the track to then upgrade node to premise.

It does pay to sometimes fork out a bit more to begin with to save a pile in the future, however that defies the 3 to 4 year cycle of politics.

Francis Young

3

The Telstra deal slashed $8 billion in overbuilding costs and much time, and avoided litigation over user migration to fibre.

The Optus deal ensures that the FTTH laying exercise is efficiently done to all premises in a suburb in a single pass. Coming back to retrofit 20% of premises 2-3 years later will double the cost of laying it in the HFC footprint.

It is indisputable that only fibre to premises is capable of delivering the bandwidth that even a straight line extension of past growth would require, especially upstream, by 2020.

Sure, the decommissioning of HFC is not due until 2018, and could easily be put back a year or so if there was still user demand for something inferior to fibre, but it would impose great operational cost to Optus and Telstra for which they would expect compensation.

Mr Turnbull has now formally endorsed the NBN funding model. Will he soon end the weasel words about who will end up paying the cost of retaining copper and HFC in the fibre footprint?

Abel Adamski

4

Just what is the obsession with the HFC, are you still using your P2 Computer and ribbon printer ? Why not?
The only real value in the HFC is maintaining a Pay TV Monopoly , upgrade for adequate Broadband for all the residences and businesses it passes (including MDU's) would be greater than the FTTH for them.

The reality of infrastructure competition was clearly demonstrated by the HFC Debacle. Sure Telstra overbuit OPTUS, but that was just infrastructure COMPETITION so what was the result?
Same problem in the US. The entrenched MODERN Up to Date Cable Co's have the scene sewn up especially with their cable TV, why Google and Co have issues and why their networks will become progressively uncompetitive on the world stage.

Note in the awards, the main contenders are ALL on the Cable Networks, not free to air

Who wants to change their email address - think about it.

Abel Adamski

5

That is why for a economical "future proof" ubiquitous National communications network the current NBN is far ahead of anything else presented. The legacy network MUST be replaced at some point, piecemeal will just be horrendously expensive, so bite the bullet and just do it

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