news Telstra yesterday confirmed it had not yet kicked off renewed negotiations with NBN Co over access to its HFC cable and copper networks, as concerns continue to grow that the Coalition’s Broadband Network Project, which has several components highly dependent on the talks succeeding, is likely to be significantly delayed.
Labor’s previous model for its National Broadband Network project involved rolling out Fibre to the Premises infrastructure to most of the nation. In order to speed up the rollout and make it more financially successful, the previous Labor Government and NBN Co negotiated access to Telstra’s pits, pipes and duct infrastructure as well as negotiating for Telstra to transfer its customers off its HFC cable and copper networks onto the NBN. The deal was worth $11 billion and took three years to finalise. NBN Co was formed in April 2009, but the final contract with Telstra was not signed until March 2012, delaying the project significantly.
The Coalition’s Broadband Network project is even more complex than Labor’s initiative and will require a higher dependence on Telstra’s networks.
In early December last year, the National Broadband Network Company released its Strategic Review report into the current status of its network rollout and options for modifying the rollout to better meet the Coalition’s policy aims of delivering download speeds of between 25Mbps and 100Mbps to most Australians by the end of 2016 and 50Mbps to 100Mbps by the end of 2019.
The report found that it will not be possible to deliver the Coalition’s stated policy goal of delivering broadband speeds of 25Mbps to all Australians by the end of 2016 or at the projected cost, and has recommended that NBN Co cancel any new network rollout to up to a third of Australian premises already covered by existing HFC cable networks. It also recommended that a sizable proportion of the remaining premises would be covered by a Fibre to the Node rollout, with about a quarter of premises to received the original Fibre to the Premises model preferred by the previous Labor administration.
If the recommendations of the Strategic Review are accepted, NBN Co will either need to buy or lease access to Telstra’s copper and HFC cable networks. Either would require extensive cooperation with Telstra, both commercially and technically. This kind of ‘joint’ model is not known to have been pursued in any other country globally, with all other countries having incentivised or forced their incumbent telco to upgrade its existing broadband infrastructure.
In a briefing yesterday associated with Telstra’s decision to sell most of its Sensis division (PDF), the telco’s chief executive David Thodey was asked whether Telstra had started detailed discussions with NBN Co over access to its infrastructure.
“We haven’t said anything, but yes, we are keen to get going as the – you know, in response now to the government’s Multi-Technology mode architecture, and we will hopefully start conversations as soon as everyone is back on deck after the break,” Thodey said. Pressed on the issue, the executive noted that the negotiations would “definitely” start before the end of January.
While in Opposition, Communications Minister Malcolm Turnbull said in August last year that he believed Telstra would give a Coalition Federal Government its copper network for nothing under its existing contract with NBN Co, casting skepticism on critics of the plan who believe the telco could charge billions for the infrastructure.
However, even that statement did not take into account the need to purchase or otherwise gain access to Telstra’s HFC cable network. It is likely, given the details contained in NBN Co’s Strategic Review, that NBN Co may also need to seek direct access to Optus’s HFC cable network.
It is not clear precisely how long the negotiations between Telstra and NBN Co over access to the infrastructure will take, although the previous negotiations took three years to finalise. If negotiations started before the end of January, that would mean a gap of four months between the new Coalition Government taking office and the talks starting.
However, the company’s Strategic Review notes that it assumes that NBN Co would be able to gain access to the HFC cable networks in the second half of calendar year 2015 — with “fill-in and lead-in work being completed in four subsequent years”.
Likewise, FTTN deployments to the remainder of the country not served by FTTP would be undertaken in the same timeframe — from the second half of 2015. Full rollout of FTTN would not be possible until early 2018, according to the Strategic Review (this information can be found on page 96 of the review).
Another issue which may be addressed in the negotiations is access to Telstra’s FTTP network in the area of South Brisbane. A new hospital constructed in the region has meant that Telstra has replaced its copper network in the area with a FTTP network to 18,000 premises. According to a letter sent to the Australian Competition and Consumer Commission in mid-2011, both sides eventually intended for the network to be sold to NBN Co.
Image credit: Telstra