The nation’s largest telco Telstra today said a gulf had opened up between its financial expectations and those of the National Broadband Network Company in ongoing talks between the pair about how Telstra’s assets and customers could be migrated to the new fibre network.

“Currently there is a significant gap between Telstra and NBN Co on what each party considers to be an acceptable financial outcome, and there are also a range of commercial matters that are yet to be agreed,” the telco said in a brief update to shareholders on the status of the talks.

Telstra, the NBN Co and the Federal Government have been negotiating for months on the exact terms of which the telco would work with NBN Co on migrating its retail customers across to the planned new fibre network and other matters such as access to Telstra’s infrastructure.

Both are seen as critical factors to the success of the NBN, particularly on an economic basic. In Telstra’s half-yearly results in February, Telstra chief executive David Thodey (pictured) highlighted the complex nature of the talks.

Today Telstra said the trio were approaching the negotiations on a “business to business basis”. “Telstra is discussing ways in which the gap can be bridged, recognising that the Government has highlighted the national interest benefits of the NBN and reform of the telecommunications industry,” the telco said.

“Further, as Telstra has stated in its submissions to Government, a range of legislative and regulatory approvals will be needed for an agreement to be implemented.”

Communications Minister Stephen Conroy is currently facing difficulties in getting his wide-ranging package of telecommunications reform legislation through the Senate, with the Opposition having pledged to vote against the bill and the Greens — crucial to getting it passed — threatening to pull their support if Conroy does not table the NBN implementation study which lays out the future of the network.

Among other things, the reform package contains provisions for breaking up Telstra into retail and wholesale arms.

Telstra has also previously said it was “very concerned” about the potential for NBN Co to offer retail services in competition with other players in the telecommunications market. In exposure drafts of legislation related to the NBN Co released recently, the Federal Government left the door open for the company to supply services directly to government agencies in a move that ran contrary to its stated aim for the company only to provide wholesale services.

Despite all of this, Telstra said it remained engaged with the Government and NBN Co to “achieve a timely outcome that was in the interests of the company and its investors”.

It warned that should an in-principle agreement be reached and agreed to by its board of directors, then it would need to seek shareholder approval for the full proposal — subject to “the required regulatory approvals”.

Image credit: Telstra

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2. Telstra opens up second release NBN sites
3. Telstra continues financial stagnation
4. Telstra churns its financial wheels
5. Telstra confirms Ericsson deal talks

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1. Matthew Hatton
   Posted 19/03/2010 at 12:47 pm | Permalink | Reply

   The solution is simple, and one that should have been taken by the government from the outset. The NBN should have *nothing* to do with Telstra, or their existing network and customer base.

   NBN Co should *not* have a financial goal to meet, instead their focus should be on delivering timely, reliable service to us, the taxpayer and customer.

   Having the government continually pandering to Telstra’s demands that they be included in any new infrastructure roll-out is always going to leave this country with a less than adequate solution.

   The government needs to grow some balls, tell Telstra where they can stick their anti-competitive expectations and focus on giving this country what it needs to move it out of the technological backwater that we currently inhabit.

   • Renai LeMay
     Posted 19/03/2010 at 1:14 pm | Permalink | Reply

     hey Matthew,

     there is one problem that I see with this. The difficulty with pure government bureaucracies, which you appear to be suggesting the NBN should become, is that they stifle innovation.

     Having the NBN eventually need to meet financial goals and become privatised (and for this, you need the involvement of Telstra at some level, especially in moving its customers across) means that it will still remain relatively nimble and continue to innovate.

     Otherwise … well you know what government departments are like ;)

     • Matthew Hatton
       Posted 19/03/2010 at 1:25 pm | Permalink | Reply

       Sorta, kinda, maybe.

       In my mind, the private sector has had their chance to improve on what was there, and because there wasn’t a good enough ROI for them, they never bothered.

       If the internet is going to be treated like a utlitity, it needs to be adminstered like one. The electricity lines to your house aren’t privated owned, the water and sewer pipes aren’t prviately owned (except maybe in Victoria). Why? Because they’re expected to be constructed and made accessible to everyone equally, and not at whim of some company’s bottom line.

       Also, I’m not expecting the government to be involved in every decision NBN Co makes. For an example of what I’m talking about look at how the Hunter Water Corporation operates in the Newcastle area. That is the sort of setup I want to see for the NBN.

       • Renai LeMay
         Posted 19/03/2010 at 1:42 pm | Permalink | Reply

         Fair call. I haven’t quite made up my mind on broadband as a utility just yet. Infrastructure for electricity, gas, water and roads — I don’t think any of these technologies are changing at the same rate they are in telecommunications.

         (By the gods, road technology *should* change though :) Driverless cars, anyone? Machine to machine communication to avoid crashes — yes please!)

         I am not sure yet whether this should be a govt-owned underlying infrastructure thing or to what extent private sector interests should be involved to stimulate competition and innovation. It is incredibly complex — I don’t think any country has quite worked out the model.