[LINK] We own copper and HFC cable

Stephen Loosley stephenloosley at zoho.com
Mon Dec 15 15:00:32 AEDT 2014


The AFR says this is a win-win .. with NBNCo and Telstra pulling together ..

"Telstra signs new $11b NBN agreement"

http://www.afr.com/p/technology/everyone_winner_in_nbn_deal_TPdkLLnmW9kV99D8kMm12H


The populist view of Telstra’s new deal with NBN Co will be that the incumbent telco has once again outmanoeuvred the slow-moving, government-owned monolith.

But that is not the case. This deal looks fair to both parties, unlike the agreement in 2011, when NBN agreed to pay Telstra amounts equal to a net present value of $11 billion.

While the $11 billion remains unchanged, NBN Co will this time gain legal ownership of the country’s copper and hybrid fibre-coaxial cable. Previously, it was going to be shut down. The transfer of the ownership of Telstra’s copper, and the HFC cable owned by Telstra and Optus, into the hands of NBN Co should mean a significantly faster rollout of the national broadband network.

That is good for Australian taxpayers because it will save billions of dollars. It is also good for consumers and business, which will have higher-speed connections sooner. As Communications Minister Malcolm Turnbull said at Sunday’s press conference, high-speed internet connectivity is critical for developing a smarter and more innovative economy.

Turnbull is the first minister in the Abbott government to say that technology and the use of the internet will be a key part of the government’s narrative in 2015.

The bitter and poisoned politics of NBN are giving way to a period when the two strongest financial players in communications, Telstra and NBN, will be working towards the same end.

A side benefit of the latest NBN deal is that Telstra will become NBN’s closest commercial partner as a multi-technology network is rolled out across Australia.

That is a positive development because it replaces a system whereby NBN Co hired a bunch of rats and mice and paid them peanuts to do a poor job. Now, the company with multiple decades of experience in managing and installing copper will be helping NBN meets its ambitious connection targets.

There is a double incentive for Telstra to make that work. It gets paid to do the work and the sooner the switchover occurs, the sooner it receives its disconnection payments.

Telstra chief executive David Thodey said on Sunday that he would consider upgrading Telstra’s HFC cable to the fastest possible speeds before the ownership moves to NBN Co.

That would make sense. It would be part of the land grab that is occurring right across Australia, as telcos try to lock in customers ahead of the shift to a near universal wholesale situation.

The land grab has included moves by a range of companies to offer new video-streaming services, the wider availability of set-top boxes and the shift of Foxtel and free-to-air TV stations into internet-based video services.

If Telstra upgrades its HFC cable to the latest Docsis 3 technology, it could offer speeds of 400 Mbps.

The HFC cable network passes about 2.7 million premises.

An upgraded HFC cable network could give Telstra an advantage over its competitors because it would not have to offer wholesale access. The wholesale access would only apply after it has passed into ownership of NBN Co.

While infrastructure competition is allowed under the NBN, any company offering fibre or other products in competition with NBN must offer wholesale access and structurally separate their business.

It was smiles all round when the NBN Co deal with Telstra was announced. But Thodey made clear he has put in place protections for his shareholders should NBN Co not deliver on certain promises.

Also, there remains a dispute resolution mechanism that will escalate any problems to the chief executives of Telstra and NBN Co.

However, overall this deal is a winner for both parties.

The groundwork has been laid for the NBN Co, under the leadership of Bill Morrow, to become the best asset of the Abbott government by election day 2016.

The Australian Financial Review
BY Tony Boyd






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