Turnbull: Coalition will honour existing NBN contracts
- 15 February, 2013 11:48
Shadow communications minister, Malcolm Turnbull, has confirmed a Coalition government would honour existing contracts for the National Broadband Network (NBN).
However, Turnbull said the Coalition would consider negotiating a round of further contracts to complete the roll out of a national network based on fibre-to-the-node technology, instead of the fibre-to-the-premises model currently being employed for the NBN build.
“You might complete the contacts that you’ve already got for fibre-to-the-premises and then enter into new ones for fibre-to-the-node,” he told Computerworld Australia.
Last night, Turnbull also indicated a Coalition government would not build the NBN in areas currently serviced by HFC in the "near term”, which employs a mix of copper and fibre, covering around 30 per cent of Australia.
"You wouldn't be overbuilding the HFC areas in the near term because they're getting very good service already,” he said on ABC's Lateline program.
Turnbull has previously indicated he would retain the HFC network in order to remove “barriers to competition” with the NBN.
However, retaining the HFC network would require key NBN contacts to be renegotiated, including an $11 billion agreement between Telstra and NBN Co and an $800 million agreement between Optus and NBN Co.
Mark Feetham, partner at law firm K&L Gates, said contract renegotiation might not be a straightforward process.
He said some contracts might need to undergo regulatory approval from the ACCC, a process the current Telstra and Optus agreements with NBN Co had to go through.
“Generally contracts don’t allow one party to dictate a change. However, some government contracts will require the parties to negotiate in good faith,” Feetham said.
“If the parties aren’t able to reach an agreement, then sometimes the clause will go on and say that if the parties aren’t able to agree after a period of time, then one party can terminate the agreement.
“It’s unlikely that the contract’s going to have a unilateral right for the government just to vary the contract.”
In cases where agreements are terminated, Feetham said compensation would need to be paid.
“The leverage that the Coalition government would have would depend on whether the terms of those contracts allowed for a reshaping or a re-scoping or a possible right to terminate the contract in the event of regulatory change,” Feetham said.
Although the Coalition has repeatedly stated it would mainly use a fibre-to-the-node network for the NBN in brownfield premises, with fibre-to-the-premises in greenfield developments, Turnbull said he is not completely against FTTH as a technology.
“What you have to do is balance a bunch of different things,” Turnbull told Computerworld Australia.
“You’ve got to balance the service [and make sure] the infrastructure you’re proposing to build can deliver both … capability and in terms of what customers actually need or will pay for.
“Then you’ve got to think about how much it is going to cost, because that’s going to impact on how much you’re going to have to charge for it – the more it costs, the more you’re going to have to charge.
“If money was no object and you didn’t care how much money you spent and you didn’t care how long it took, yes you would do fibre into every house – without a doubt.”
However, Turnbull conceded that the “claimed” benefit of FTTH is that it can deliver much higher speeds – up to 1Gbps, in the future.
“That is not feasible under fibre-to-the-node – at least in the present time,” Turnbull said.
“Although it’s worth noting that the NBN is advertising 100Mbps as their top speed product and of course 100Mbps is way more than most people either need or let alone will pay for, as indeed the carriers have found out already because … Telstra’s offering a 100Mbps product on HFC and hasn’t had much success in selling it.”
Telstra's HFC network passes 2.8 million premises.
Further NBN delays a “debacle”
On Wednesday, NBN Co said contractor Syntheo was responsible for NBN Co downgrading its premises passed target for June 2013.
Addressing a Senate Estimates hearing, NBN Co didn't reveal the specific problem that led to the change in targets.
“This performance in WA, SA and the NT does not fill you with any confidence … We are constantly getting anecdotal reports of the rollout not being effective and not meeting targets, even the reduced targets that they set in August last year,” Turnbull said.
The NBN has suffered previous delays stretching back to March 2011, when NBN Co blamed protracted negotiations with Telstra for delays to the launch of second release sites for the network.
In August last year NBN Co blamed the ACCC for contributing to a nine-month delay due to the approval process required by the watchdog for the $11 billion definitive agreements between Telstra and NBN Co.
Turnbull described the latest rollout delay as a “debacle” and took a swipe at what he said was NBN Co’s lack of transparency, which he has said has hindered the Coalition in costing its version of the NBN.
“NBN management, as you know, are hardly forthcoming,” Turnbull said.
“For a company whose main product is glass fibre, they’re not very transparent.”
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