[LINK] Telstra/Govt reach a deal on NBN

[Jan Whitaker]

Telstra signs transfer deal

Lucy Battersby
June 20, 2010 - 3:02PM

Telstra has signed an $11 billion deal with NBN Co to transfer 
customers from its copper network onto the National Broadband 
Network's fibre network and share Telstra's infrastructure.

The preliminary deal was announced by Prime Minister Kevin Rudd, who 
was flanked by senior ministers Stephen Conroy and Lindsay Tanner, 
Telstra leaders Catherine Livingstone and David Thodey and NBN Co 
senior figures Harrison Young and Mike Quigley.

Under the deal, NBN Co will have access to Telstra's network of pits, 
ducts and wires.

The government had been seeking a commercial arrangement with Telstra 
to avoid the need for a duplication of infrastructure for the 
national rollout of its $43 billion broadband network.

As part of the deal, Telstra will migrate customers onto the fibre 
network as the NBN is rolled out around Australia. Telstra will keep 
its cable network, and will be allowed to bid for wireless spectrum 
in the future.

Mr Rudd said negotiations with Telstra had been ''very difficult, 
tough, hard'', and noted - perhaps with an eye to ongoing discussions 
with miners over the resources tax - that it had been an ''honest set 
of negotiations.

''It demonstrates what can be yielded through a process of 
negotiations where the end point is to deliver better services for 
all Australian and a better outcome for our economy.''

His Communications Minister, Senator Conroy, said the agreement was a 
historic day for Australian telecommunications.

''This agreement provides us with a clear pathway to take Australia 
from the copper age to the fibre future,'' he said.

''These negotiations have been tough, they have been complex and at 
times they have been colourful.''

Senator Conroy said a turning point in negotiations was the change of 
leadership at Telstra, with the departure of chief executive Sol 
Trujillo and chairman Donald McGauchie.

''The single most important change that took place was when the 
Telstra board elected Catherine (Livingstone) and David (Thodey) as 
chair and CEO,'' he said.

The government says the deal will reduce the overall cost of building 
the network and will also result in higher take-up rates and revenue. 
A greater proportion of the NBN network will be underground, with 
less need for overhead cabling than initially planned.

"This is a sound outcome for NBN Co because, when finalised, it can 
maximise the use of existing infrastructure and accelerate the 
rollout of its network," NBN Co chief executive, Mike Quigley, said 
in a statement this afternoon.

"It also means Telstra is likely to become NBN Co's largest customer 
as it progressively migrates its voice and broadband traffic to NBN 
Co's wholesale-only, open-access network, providing greater certainty 
about future revenues.''

Telstra will receive $9 billion over several years to compensate for 
NBN Co using its infrastructure and the loss of future income from 
fixed-line customers. A further $2 billion of government money will 
be used to set up a new company called USO Co, to look after 
Telstra's Universal Service Obligations, retrain Telstra staff, and 
make NBN Co a wholesale supplier of fibre for new housing 
developments from January 1, next year.

Mr Quigley, NBN Co's chief executive, said the $9 billion the network 
was paying for access to Telstra's assets was a ''very sound outcome''.

''It maximises the use of existing infrastructure, it avoids 
infrastructure duplication, in accelerates the rollout of the NBN 
and, most importantly, Telstra is likely to become NBN Co's largest 
customer,'' he said.

Ms Livingstone, Telstra's chairwoman, said the final agreement would 
be analysed by an independent expert before the company would sign 
off on the deal.

''Clearly Telstra has negotiated very hard over the last 12 months 
and we are very well informated about our business and the interests 
of our shareholders,'' she said.

The agreement still requires shareholder approval and ACCC approval. 
Telstra expects shareholders will be able to vote on the deal in early 2011.

With Ari Sharp and AAP

This story was found at: 
http://www.theage.com.au/business/telstra-signs-transfer-deal-20100620-yosf.html 




Melbourne, Victoria, Australia
jwhit at janwhitaker.com
blog: http://janwhitaker.com/jansblog/
business: http://www.janwhitaker.com

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