Telstra-NBN Co deal: Telstra plans phased copper decommission

Majority of Australians will be pushed to an ubiquitous NBN over time

Residents and businesses on Telstra’s copper and cable networks will be effectively pushed to the National Broadband Network (NBN) under the $11 billion Financial Heads of Agreement deal between the telco, network wholesaler NBN Co and the Federal Government.

The telco’s CEO, David Thodey, revealed in a media and analyst briefing that, should the agreement be finalised, Telstra would progressively decommission its copper network as NBN Co rolls out fibre across Australia.

“Practically, what will happen is the fibre will be put into an area and it’ll be switched on, and then customers will be able to choose their retail service provider,” Thodey said. “They can choose Telstra or somebody else who knocks on the door.

“There will be a period of time when customers can make that choice before we have to decommission the copper, or for that matter the cable broadband cut.”

Under the agreement - which is subject to approval by Telstra shareholders and the Australia Competition and Consumer Commission (ACCC) - NBN Co will lease Telstra’s existing fibre, ducts, pipes and other infrastructure for $9 billion over an undisclosed amount of time. Thodey said that amount would be paid to the telco as the copper network is decommissioned.

“We’ll be driven by NBN Co but you work in a district, you then have to get everyone across, then you can start the decommissioning process,” Thodey said.

The decommission will occur at the exchange level rather than at individual houses, but Thodey would not say what kind of saturation point would be reached in fibre uptake in a given area before remaining customers are encouraged to transition between the networks. The telco's chief also declined to say if there would be any measures to prevent unnecessary decommissioning of copper should the NBN or NBN Co fail to eventuate.

“I think that one of the key things in our negotiations has been that Telstra is not dependent on the success or otherwise of NBN Co,” Thodey said. “As we’ve worked through this, we need to make sure we had the flexibility to do what we need to do as a company. That risk resides with NBN Co, not with Telstra.”

Under the agreement, Telstra will forfeit its Universal Service Obligations (USO) to a new government entity, USO Co.  At the same time, those homes in the remaining seven to ten per cent of Australians who will not receive fibre-to-the-home (FTTH) services as part of the NBN will continue to use the copper network for telephony services.

Communications minister, Stephen Conroy, revealed on ABC’s News Breakfast program that the existing USO industry levy would be restructured with input from the sector to ensure the rural copper network was interoperable with the wider NBN.

“There was always going to be a need to maintain that copper network while we were taking away the core copper networks in the rest of the country,” Conroy said.

However, how the remainder of Australians transition existing telephony services to the NBN is still up for question. The Communications Alliance recently released a discussion paper on Voice over IP (VoIP) standards which could effectively take the lead role in such an ubiquitous fibre-to-the-home (FTTH) network.

NBN Co chief executive officer, Mike Quigley, recently told a Senate estimates hearing that Telstra's ageing copper network could be recycled and potentially sold.

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Tags Telstra-NBN Co deal

More about ABC NetworksABC NetworksAustralian Competition and Consumer CommissionFederal GovernmentQuigleyTelstra Corporation

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