Telstra-NBN Co deal: Opposition slams Telstra and NBN deal

Claims the plan will be costly to taxpayers and results are a long way off

The Federal Opposition has slammed the Heads of Agreement signed between the NBN Co and Telstra (ASX:TLS), calling the non-binding deal a "desperate" attempt to shore up its "ill-thought-through" NBN plan. It has also let fire at the Federal Government's $2 billion payout to Telstra to cover the cost of its Universal Service Obligation.

In a recent blog post, shadow communications minister, Tony Smith, claimed that despite the agreement, it was likely services for consumers would still be some time away. Smith also claimed the $9 billion being paid to Telstra for its assets was a waste of tax payers' money.

"What value are taxpayers getting for the $9 billion which is to be handed over to Telstra? Labor claims this is justified to reduce the cost to taxpayers of building the NBN – but this hugely expensive and risky venture is something that no responsible government would contemplate in the first place," the post reads.

Smith also questioned the pay out of $2 billion by the Federal Government to Telstra to cover the cost of the company's Universal Service Obligations.

"Labor is also throwing $100 million a year of taxpayers' money at the universal service obligation – a cost that has always been met by the telecommunications industry yet now is another cost foisted on the taxpayer," the post reads.

"The Coalition does not believe that it is the role of government to force taxpayers to spend billions of dollars to build and or buy businesses in areas where the private sector is able to perform the role."

Family First senator, Steve Fielding, said in a statement that the deal proved he was right in blocking the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 - which would see the functional or structural separation of Telstra - from passing the Senate.

"Family First will take its time in considering the $11 billion deal before making any decisions on legislation before parliament," Fielding said.

Australian Greens' communications spokesperson, Senator Scott Ludlam, said in a statement that, in contrast, the Greens were encouraged by the Heads of Agreement.

According to Ludlam, the agreement blocked an expensive and drawn-out conflict between Telstra and the Government, which would have potentially resulted in “wasteful duplication of resources.”

“We won't now have two wholesale networks competing in a space which most people recognise is a natural monopoly,” Ludlam said. “It may be that this is a significant step along the way to undoing some of the damage that was done when we privatised the national telecommunications carrier."

Ludlum also called on the Government to bring its Telstra legislation back to the Parliament so that it could be debated.

As reported by Computerworld Australia, the Government has overcome one of its largest hurdles in doing the deal with Telstra. As part of a Financial Heads of Agreement deal, Telstra will migrate its voice and broadband customers to NBN Co, while decommissioning its copper network and cable broadband service.

Despite Ludlam’s supportive comment on the agreement, he was previously involved in a Liberal-dominated Senate select committee on the NBN, which at any one time, consisted of four Coalition senators, Ludlam, and Labor senators, Kate Lundy and Glenn Sterle.

The committee's final report largely reinforced the main recommendation of its fourth interim report that the government "abandon its NBN proposal in its current form".

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