NBN Co steps closer to three-year rollout plan

By James Hutchinson on Feb 29, 2012 8:25 AM
Filed under Communications

Deal with Telstra almost done.

NBN Co has moved a step closer to releasing a three-year rollout plan for its broadband network after a key regulatory hurdle was resolved this week.

The company is expected to reveal the rollout plan later by the end of March, pending cabinet approval of Telstra's structural separation and the telco's $11 billion deal with NBN Co.

The plan will be based on detailed information about Telstra’s existing customer access and dark fibre networks, now available to NBN Co as a result of the deal.

It is understood NBN Co could gain first access to Telstra infrastructure within a week of today's announcement.

Previously, NBN Co has worked with a rolling one-year plan, released late last year and updated in January.

The incumbent's structural separation and customer migration plans were approved today by the Australian Competition and Consumer Commission (ACCC).

The ACCC announcement means it has taken 20 months to finalise the $11 billion deal between Telstra and NBN Co.

The deal provides for Telstra to progressively decommission its copper as NBN fibre is rolled out, while also migrating across broadband customers from its cable network.

It also provides NBN Co with access to dark fibre, ducts and Telstra exchanges and detailed network information required to speed up the rollout and reduce the overall cost of the network build.

Though NBN Co had access to some infrastructure under an interim agreement with Telstra in some areas, the undertaking’s green light from the ACCC will allow the final deal to be enforced.

“The Definitive Agreement unlocks the full potential of the deal and gives us the certainty we need to finalise our three year plan and continue with confidence the ongoing acceleration of this monumental project," NBN Co chief executive Mike Quigley said in a statement.

$500m bill unlikely

Delays to the rollout also mean taxpayers are unlikely to be left with a multi-million dollar bill if the Coalition win the next election and attempt to stop the NBN.

Communications Minister Stephen Conroy said there would not likely be any risk of exit clauses in the Telstra agreement being enacted should the Coalition win in late 2013.

The agreements provide for the Federal Government to pay Telstra $500 million should NBN Co be disbanded after reaching more than 20 percent of premises in the rollout.

The initial NBN Co corporate plan provided for 1.7 million premises being passed by June 2013 - or 14 percent - but delays in finalising the agreement and to the construction tenders have pushed back those plans.

“Because of the eight-month delay in getting this [deal] approved, it’s not likely to threaten the 20 percent either,” Senator Conroy said.

 

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Structural separation a go

The ACCC approved a third revision of Telstra’s undertaking, submitted last week, ensuring the telco provides equivalent pricing and service to wholesale customers and its retail arm over the course of separation.

The company will publish a “rate card” of standard pricing for all wholesale services and has pledged to re-negotiate wholesale DSL contracts in light of the watchdog’s recent decision to regulate pricing for the service.

A final wholesale DSL service is expected by the end of the year.

"This SSU has been the subject of extensive consultation and public discussion. The ACCC acknowledges contributions from industry, as well as the preparedness of Telstra and NBN Co to modify the undertaking in response to legitimate concerns,” ACCC chairman Rod Sims said in a statement.

"Many of these measures were significantly strengthened during the public consultation period, through expanding the scope of their application and the range of consequences in the case of non-compliance.”

Though the undertaking was under six months’ consideration with the ACCC, finalisation came only after last-minute agreements from NBN Co and Telstra over the latter’s ability to market its mobile broadband services alongside NBN products.

Any future amendments to Telstra’s agreement with NBN Co will also fall under the ACCC’s scrutiny.

Holy grail sealed

Senator Conroy pointed to the ACCC’s approval of the SSU as the realisation of his attempt to seal the “holy grail of micro-economic reform in this sector”.

“The telecommunications industry has been seeking this outcome for two decades,” he told media today in announcing the approval.

“Telstra did not voluntarily agree to the separation... to be honest, we gave them some pretty harsh alternatives.”

He claimed a future Coalition Government would likely push back structural separation but shadow communications minister Malcolm Turnbull was quick to debate the issue.

“The truth is, as [Prime Minister Julia Gillard] well knows, that the Coalition supports structural separation of Telstra, supports upgrading the broadband services across Australia but will ensure that is done in a manner that promotes competition,” he said in a blog entry posted during Senator Conroy’s press conference.

 
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