[LINK] Telstra/Govt reach a deal on NBN

[Richard Chirgwin]

David,

David Boxall wrote:
> On 20/06/2010 6:24 PM, Jan Whitaker wrote:
>   
>> Telstra signs transfer deal
>> ...
>>     
> I can't help feeling that we were first encouraged to buy something, 
> largely built with our tax dollars, and now our tax dollars are buying 
> it back.
>
>   
I'm going to pick this one up.

NBN Co is not buying the Telstra network - I don't know where this idea 
first emerged, but it's taken hold awfully quickly. NBN Co is "buying" 
wholesale customer traffic if / when that customer transfers to the NBN 
Co fibre.

If I look at prices paid to acquire customers, the NBN Co price isn't so 
bad - depending on how you treat the $4 billion for customer migration 
plus $5 billion for network access, you could say it's between $444 and 
$1,000 per customer. But because the NBN will be (excepting competition 
from wireless networks) a monopoly, it will have effectively retain 
those customers forever. Telstra might lose the customer, but the 
traffic will still traverse the NBN. So - over a ten-year period the 
price per customer for that traffic is less than $10 per month.

But the NBN Co is only acquiring a wholesale relationship - the retail 
relationship remains with the customer.

As for tax dollars buying the customer; NBN Co is expected to return its 
costs - ie, make a profit on the investment. So if (say) $4 billion is 
spent today to return (say) $5 billion later, then the net effect is 
hardly a downside, is it?

Finally: Telstra was always going to have to retire the copper network 
one day. It's probably better to do so by way of an orderly exit.

RC