The $11 billion deal between Telstra and the NBN Co was essential to secure its estimated 10 million customers required for the success of the National Broadband Network (NBN), telecommunications providers say.
The non-binding Financial Heads of Agreement deal, should it receive a tick from Telstra shareholders next year, will grant the NBN Co access to Telstra’s network pits and the “right” to its backhaul.
The deal will also see customers on Telstra's existing copper and HFC or cable networks progressively migrate over to the NBN, effectively boosting take-up of the national network's services and allowing customers the chance to choose another service provider on an equal access standing. The telco will decommission its copper network as customers migrate across.
Internode managing director, Simon Hackett, said the NBN is only financially viable if Telstra engaged with it as a retail service provider (RSP).
“The NBN needs Telstra as a paying customer to make the numbers add up. So the government had to announce an intention of this sort to make the NBN make sense at all,” Hackett said, adding that compensation paid to Telstra for migrating its ADSL customers to the NBN should extend to all carriers with ADSL investments.
“The ADSL2+ market would not exist without those competitors and those investments, and the innovation here isn't about the copper wires - its all about the equipment installed at the ends.”
iiNet managing director, Michael Malone, said the claims within the Implementation Study that the NBN could be built without Telstra were “debatable”.
“Telstra’s traffic, more so than infrastructure, is a huge plus. Migrating customers in regional towns from the copper to glass is the best way to make this work,” Malone said.
“It is the lowest impact to the customer — we presently have to market the NBN to each customer when we build in a town.”
Malone said the move will bolster uptake of the NBN, and quell reports that the network would suffer poor subscription levels. He said transferring Telstra customers passes “the mum test”, meaning it would provide Internet users reluctant to upgrade with faster access speeds and more services without requiring significant technical knowledge.
iiNet maintains some 50,000 dial-up Internet users, some 10 years after it introduced its ADSL services.
Optus regulatory affairs chief, Maha Krishnapillai, said the deal was positive despite that many details had yet to be “thrashed out”.
“We’ve now got Telstra, the industry and government saying the same thing,” Krishnapillai said.
“We need to make sure there is a safety net, and that is does not become a done-deal behind close doors. We will maintain a strong interest in exactly what structural separation looks like and the powers held by the [Australian Competition and Consumer Commission]."