Telstra worried about NBN Co retail option


The nation’s largest telco Telstra has issued a letter to shareholders warning them it is “very concerned” about the potential for the National Broadband Network Company to offer retail services in competition with other players in the telecommunications market.

In exposure drafts of legislation related to the NBN Co released last week, 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.

“Such an outcome would run counter to the core purpose of the NBN and the Government’s primary policy objective of restructuring the industry to have separate providers for retail and wholesale fixed network services,” said the telco in a letter released this morning under the names of its chief executive David Thodey (pictured) and chairman Catherine Livingstone.

Telstra said it was “very concerned” in the potential change in the Government’s position and that the apparent policy change would affect its ongoing negotiations with NBN Co and the Government over how Telstra will migrate its customers to the NBN and separate its operations.

“We would need to factor this into the financial consideration required to achieve an agreement that is in the company’s and your best interests,” Telstra said.

Telstra also reiterated earlier comments about another piece of legislation, the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009, commonly referred to as the bill that has the potential to break up its operations into wholesale and retail arms if it does not voluntarily separate.

The telco said the legislation – which has not yet been fully debated in Federal Parliament – was likely to destroy shareholder value and made an agreement between the telco and NBN Co and the Government “harder to achieve”.

The company particularly objects to to the bill’s potential to deny Telstra access to spectrum to deploy wireless services, the “unprecedented and largely unconstrained powers the legislation gives the Australian Competition and Consumer Commission and the [communications] minister”, and the costly process of functional separation it could mandate.

Despite all this, the telco said it remained committed to the negotiation process with the Government and NBN Co and was awaiting clarification from the pair on several “complex” issues.

Image credit: Telstra


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