Telstra confirms Brunswick NBN contract

Around half of Financial Heads of Agreement deal sees Telstra infrastructure used in NBN rollout

Telstra has confirmed it will supply and install the optical fibre network infrastructure in the Melbourne suburb of Brunswick as part of the National Broadband Network (NBN) rollout.

The network wholesaler, NBN Co, had said it was in negotiations with Telstra to use the telco’s existing infrastructure when it announced the winning construction tenders of the first five mainland release sites, but had not made any commitments at the time.

The incumbent telco’s chief executive, David Thodey, confirmed the agreement during a financial earnings webcast and said it was an example of the hard work in negotiations between the two companies.

The contract will see Telstra roll out infrastructure for roughly 2600 premises in Brunswick. Construction was slated to begin last month, however recent comments from federal communications minister, Senator Stephen Conroy, indicate that the construction remains a “few short weeks” from commencement.

Telstra may also be charged with rolling out infrastructure to an additional 3000 premises in the same area as part of the second set of mainland release sites, with construction due to begin there early next year.

As part of the webcast, Thodey also revealed that roughly half of the $9 billion NBN Co will give Telstra as part of the non-binding Financial Heads of Agreement deal between the companies will be spent on the utilisation of existing infrastructure, including ducts, exchange space, dark fibre and managed backhaul fibre.

A Telstra spokesperson revealed to Computerworld Australia that the telco already had roughly 200,000 kilometres of route fibre and a total six million kilometres of fibre in its network, both dark and active. The telco also has an estimated 110,000 to 140,000 kilometres of duct space.

However, NBN Co head of corporate affairs, Kevin Brown, said that would not be enough for the NBN, if it goes ahead.

The arrangement, if approved by Telstra shareholders and the Australian Competition and Consumer Commission (ACCC) early next year, will last for 30 years or longer and will see the telco move its copper and cable-based broadband customers over to the NBN as it is rolled out.

Telstra will also progressively decommission its copper network within 18 months of fibre being rolled out to a given area, ultimately pushing users who do not adopt the NBN in time over to the fibre-to-the-home (FTTH) network. The telco will, however, retain its hybrid fibre coaxial (HFC) cable network for the continued transmission of Foxtel cable TV services.

“I do want to stress there is still a lot of work ahead of us to get the agreement finalised,” Thodey said during the webcast.

“We’re pleased with the progress on NBN negotiations, but... whatever happens with NBN is irrelevant to what we need to do as a company.”

The telco head refused to discuss politics, saying the company would “constructively work with either side of government” come 21 August.

The Liberal party has pledged to scrap the NBN if elected - thereby rendering the Financial Heads of Agreement deal redundant - and refused to forcibly separate Telstra, as would occur under a Labor Government.

“There are fundamental changes occurring in this industry that make it essential for Telstra to undergo significant change,” Thodey said.

As part of the company’s strategy to take advantage of new revenue streams and challenge declining PSTN revenue, Thodey said the telco would refocus on key objectives such as improving customer satisfaction, simplifying business, competing “fairly but aggressively” for customers while also investing in long term business opportunities such as cloud computing and unified communications.

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