Tell them they’re joking: Telstra still wants to own copper or HFC



blog If you’ve been following the statements of Communications Minister Malcolm Turnbull and NBN Co executive chairman Ziggy Switkowski, you would think Telstra wouldn’t have a problem with selling both its copper and HFC networks to NBN Co so the Coalition’s much-hyped ‘Multi-Technology Mix’ rollout approach can go ahead. “I think the outcome of these negotiations should lead to a situation where the copper network, the ownership, is transferred into the NBN; the ownership of the HFC network is transferred into NBN,” Switkowski said in early April. However, as it turns out, Telstra has other ideas. The Australian newspaper reported last week (we recommend you click here for the full article):

“Telstra boss David Thodey has revealed the telco giant wants to retain control of either its copper or cable network as part of its reworked $11 billion deal with NBN Co …”

Wow. This kind of throws a massive spanner in the works for the Coalition’s MTM mix option for NBN Co’s rollout. If Telstra winds up continuing to own either of its major fixed-line networks, this could cause significant headaches for NBN Co down the track if it gets into significant contract disputes with the big T, as well as during NBN Co’s eventual privatisation, because NBN Co will always remain heavily dependent upon Telstra for access to its basic infrastructure.

Globally, the model which the Coalition is proposing with its MTM mix approach is very unique commercially. Nowhere else has the Government attempted to buy back the incumbent telco’s copper network after privatising in the first place. And nowhere else globally has the government also sought to buy not one, but two HFC cable networks owned by other telcos.

What we’re seeing here with Telstra during the negotiation process over access to the telco’s networks is Telstra leveraging its position of strength over the Government to get the best possible result from the negotiations. Under Labor, the Government had Telstra up against a wall, because it fundamentally did not need Telstra’s assistance to build its NBN fibre infrastructure. It had the advantage. Under the Coalition, Telstra has the advantage — because the MTM mix approach cannot be delivered without Telstra’s active assistance. And Telstra is leveraging that situation to the absolute hilt.


Image credit: Telstra


    • Farce just became ‘farcier’…

      i can’t wait to see what makes it become “farciest”.

      • Can’t wait to see what the word is by the end of their term.. It may even come close to breaking the worlds longest word!

      • Farce, farcier, farciest,
        we will never rest.
        Until our farce is farcier,
        and our farcier, farciest.

        Catchy and nostalgic. I like it.

    • I’ve been quiet on this for ages. I predicted this but was told that I was wrong.

      Well I say this. What else have I said that will come to pass.

      I hate liberals despite voting for them when I was younger and much more naïve.

    • I would suggest their whole ‘sooner faster cheaper spiel’ was intended to become a farce from the very beginning when it was launched at Fox Studios.
      Does that location tell us anything?.
      Abbott debated selling his posterior but wouldn’t budge from demolishing the NBN ever when his top prize was at stake according to Oakshott…why?
      Lots of money & time wasting reviews & reports later they have replaced everyone of consequence with ex-telstra staff & left Telstra/Foxtel in the driver’s seat for control of the required networks.
      Starting to look very much like ‘later slower dearer’ to me.

  1. I think the stupidity in all of this was enforcing a “plan” and setting a price tag on the MTM network. It gives Telstra an incredible advantage in that they know the Government will want the asset or at least gain access to the assets regardless of cost.

  2. What we’re seeing here with Telstra during the negotiation process over access to the telco’s networks is Telstra leveraging its position of strength over the Government to get the best possible result from the negotiations. Under Labor, the Government had Telstra up against a wall, because it fundamentally did not need Telstra’s assistance to build its NBN fibre infrastructure. It had the advantage. Under the Coalition, Telstra has the advantage — because the MTM mix approach cannot be delivered without Telstra’s active assistance. And Telstra is leveraging that situation to the absolute hilt.

    Wow. Really. Wow.

    Hon. Malcolm Turnbull, the businessman of many millions, has snookered himself on this project.

    Where is the MSM organisations talking about how taxpayers are going to be f**ked over by the approach.

    Really, who’d have thought. A prominent twitter agitator made the comments (that I agreed with) regarding the lack of numbers from the LNP Government including the cost of purchasing the copper networks.

    In any other business environment a board would revolt against these strategic failings.

  3. Oh great. So when the HFC Cable in my street has issues, I’ll call my provider, who’ll call NBNco, who’ll Telstra.. I can see that going _really_ well.

    So the government wants to save a little rollout time (let’s face it, in the long term the money factor is irrelevant) and put us back in a position of being hamstrung by a private corporation. All whilst that time saving could also be irrelevant as MT’s plan has a larger scope for time and cost blow outs than Labor’s plan ever did (When you are ripping and replacing everything, you are not dependent on as many unknowns).

    TL;DR: wtf?

    • “Oh great. So when the HFC Cable in my street has issues, I’ll call my provider, who’ll call NBNco, who’ll Telstra.. I can see that going _really_ well.”

      That is pretty much 100 percent what is going to be happening.

      • And I bet Telstra will stick their hands out for remediation costs as well. I’m completely at a loss, it’s completely illogical. But maybe that’s what MT is trying to achieve, wear us down until we just accept whatever we’re given. Like a certain character out of GoT.

        • Its perfectly logical when you consider that the LNP wants private enterprise to control everything.

          Its only when you disagree with any part of that approach that it stops being logical.

        • Except i think we are now abit more broken than “that character”

          I know i am


        • You can’t blame Telstra though, they are just doing what they are required by law to do, look after their shareholders interests.

          it’s a shame that Malcolm doesn’t take the same approach and look after his ‘shareholders’….

    • What happens if your ISP is telstra
      so Telstra call NBNCo who in turn call Telstra

      That sounds cheaper

      • You’ll initially get transferred to an Indian call centre, who will transfer the request to Bigpond Services, who will then call NBN Co, so they can call Telstra HFC…

        So could be one more step in the chain.

        And more expensive.

  4. Frankly, I hope Telstra holds out until the next election. They have all the cards here. Big Mal might like to think that they’d just hand over the CAN and HFC networks for free, but the reality is that Telstra are only interested in benefitting themselves and their shareholders (just as any other corporation is). Their $11 Billion contract with the government can only go up from here and they know it.

    Some people on the Whirlpool forums are theorising that if Telstra continues to play hardball (say, into 2015 and onwards), the Coalition may have to switch from Scenario 6 to Scenario 4 from the Strategic Review. While I would certainly welcome the change, it’s very doubtful that Turnbull would go for it. As Renai has pointed out many, many times, the difference between investing in an optimised, all Fibre NBN vs the watered-down mess that they plan to build is negligible in the scheme of things, and yet they refuse to do it.

    Having said that, if after a full year or more of being in office Turnbull has not rolled out his CBN to one single house there will be hell to pay.

    • Turnbull claimed he is technology-agnostic, that he is not ideological about technology choice, but he lied: Turnbull is ideological about fibre. He doesn’t want fibre, and he wants to minimise the amount of fibre in the rollout. I don’t understand his thinking – and it can’t be understood – that’s why it’s ideological.

      • This isn’t about the technology, it is about business Ideology in that the government is doing the bare minimum to allow plenty of room for big business to do what is does best*. I sometime wonder why some members of LNP want to govern when they don’t seem interested to doing many of thing that we have a government for.

        *What big business does best is not being ultra efficient at delivering services and infrastructure as the IPA, BCA and other business think tanks and lobbyist want everyone to believe. They are best at one thing and that is maximizing short term profit.

      • Ideologies are more constructive. There is no reason, logic, common sense here. There is no associated benefit to the public or government whatsoever.

        The only reason this is happening is for some other reason.

  5. This is the point where I give a shocked gasp and put up a “surprised” look at this thoroughly unexpected turn of events! =O

    Yes that was sarcasm…

    Somehow the very many “told you so’s” we’re racking up here just doesn’t quite cut it..

  6. He’ll just prove black is white.

    He’ll just have to watch out on zebra crossings (with apologies to Douglas Adams)

  7. At what point will Turnbull eat crow and decide to do FTTP? If the cost of the CAN & HFC is any more than $10b (either capex or opex) then it’s more expensive for a crappier solution.

    Renai, have you asked him these questions?

      • @Renai

        Exactly, not to the government. Here’s my prediction: Turnbull is forced to go down a rental/managed service type of deal whereby Telstra retain the asset. Fits perfectly with Liberal ideology and disguises the cost.

        • @Tom

          I meant that it won’t cost the government anything because that cost will be passed on to the end user to pay. This seems like Turnbull’s only option to give the impression that his network will cost less. Obviously it won’t but he is hoping to fool the masses.

          • @Relim

            That’s pretty much a given at this point, even if my prediction is wrong.

            The costs for powering the nodes and replacing their backup batteries in a FTTN network will almost certainly be pushed onto the end user since these costs will exist for as long as the network exists and the government doesn’t want to have to keep pumping money into it. Turnbull has no room to budge when it comes to the cost of FTTN if he wants it to appear, at least on cursory glance, to be cheaper than FTTP.

      • Yes and now that its been shown that’s not going to happen, he’ll have to face reality at some point…

        Have you asked him for an interview lately?

      • Just to set the scene (and give people something to shout about) … Nowhere else has the Government attempted to pay the incumbent to decommission its copper network and to pay two companies to decommission their HFC networks for internet and telephony.

        Given that’s where we are, I don’t think it’s beyond the realms of possibility that Optus could agree to hand over their HFC network and Telstra agree to hand over their copper without it costing the NBNCo more. That’s not to say they will just that imo it’s possible. It’s really up to Optus and Telstra, and only time will tell.

        I’m not remotely surprised Telstra does not want to hand over its HFC network as well as the copper, at least not until it gets a lot more money.

        Can Turnbull complete his MTM with Optus’ HFC network but not Telstra’s?

        • Just a thought … does the current legislation only compel Telstra to decommission its HFC network (for internet and telephony) if the NBNCo alternative is FTTP? What about if it’s FTTN? What about if it’s HFC.

          I’m just wondering if Telstra could keep its HFC network and compete with the NBNCo’s HFC network (if acquired from Optus). Alternatively, could Foxtel buy Telstra’s HFC network and offer triple play to compete with the NBNCo’s HFC network. That could make a mess of Turnbull’s MTM plan.

          • Heh – if wonder if Turnball seriously though Telstra and Murdock would play nice with him, once he gave them what they wanted.

            What a plonker.

          • not entirely sure what the total value of Foxtel is… but if they are able to swing a deal that offers more for the HFC unit than the government is offering Telstra then yes – that would leave the govt high and dry; particularly given the “30 bn and not a cent more” line they have been running lately. they either have to bin it and walk away from using HFC, incurring extra cost for whatever format needs to be pulled in for what would have been the HFC share, or grit teeth and swallow the extra (nevermind the carping about how much they fell they ‘should’ be spending on this, and i feel that amount is distinctly anaemic already).

            the idea of fronting the Optus network against the Foxtel network in HFC areas is an interesting one; but theres only really a possibility it will be competitive.

            my reasoning is, i get the distinct feeling that with the margins Foxtel have they can easily chop their pricing and steal away all or at least enough nbnco hfc potential customers, thus stranding that investment handily – basically 1994 redux.

            MT has no leverage against them as is…. never mind how ugly the MTM looks now; it could get even uglier, and fast.

          • Actually I read in the financial sector news, that Telstra is seeking to sell off it’s share of Foxtel, possibly to News Ltd.
            Cat’s and Pigeons again.
            News Ltd. could not be seen as a buyer for the Turnbull Mess, However BSkyB could be a suitor

      • He has said before he doesn’t expect the new Telstra deal to cost any more.

        He has also said that he is open to rolling out more FTTP is it is “right”, he has left himself all sorts of outs that I am sure he is proud of.

        But he has left himself with very little integrity.

      • “He has said before he doesn’t expect the new Telstra deal to cost any more.”

        Indeed he has, but I just don’t see how it can cost “not one cent more”, considering both Telstra and Optus under the Labor plan were allowed to retain and operate their cable networks (only for pay TV). Also, the original deal only covered pits and pipes, Telstra could do what it liked with the copper (sell for scrap, re-purpose/re-use for something else).

        Malcolm wants a lot more from his deal (a deal he _has_ to make to continue his project) and Telstra is required by law to get value for it’s shareholder. I’d think they would end up in some pretty heavy shareholder action if Telstra do ‘gift’ the rest of the network as well as the HFC network for “not a cent more”…

  8. This is complete madness. So not only would we still be in the same telecoms situation we have been in for decades, but we will be paying exorbitant amounts for the privilege. Oh, and our infrastructure would be decades behind the rest of the World.

    A royal commission would not be enough for this farce.

  9. Maybe Malcolm is planning to structurally separate Telstra? (in my dreams!!)

    As someone on an iiNet naked connection currently waiting for a Telstra tech to figure out why my line has suddenly stopped working, Telstra still owning the infrastructure while refusing to maintain it adequately is beyond a joke.

    There is little hope for Malcolm structurally separating Telstra for two reasons;
    1) it’s against Liberal ethos & probably his own beliefs of free market etc
    2) it’d cost too much in compensation and the budget won’t bear it

    What will likely happen is Malcolm will give in to Telstra pressure on pricing and blame Labor for creating the mess.

    Sad sad panda here.

  10. As you say – madness, saw this coming before the election. You make your business plan critically dependent on one resource with only one supplier – the copper and Telstra, and they would be mad not to soak you for every penny you have.

    Turnball basically bent over and whistled for Telstra to “Come and Get it!”

  11. hahahahahaha Ahh great news, sit on that and rotate Mal (another lie from Mal to add to my list)

    Fucking GOLD!!!


  12. Sigh. Anyone with a shred of imagination could anticipate that Telstra would react to its sudden indispensability by trying to get more out of the deal. But not Turnbull, or at least, not in any public forum.

    Did *anyone* in the MSM (not Delimiter, but the stuff ordinary punters read) ever call out Turnbull on his fantasy that Telstra was going to suddenly give all its copper to NBNCo simply because the new government thought it would be a good idea? Surely a consummate merchant banker like Malcolm could see that, like a piece of worthless land that becomes valuable when someone plans a railroad across it, the copper was going to look a lot more valuable once someone wanted to build a half-arsed information superhighway with it?

    Been saying it for a while now: FTTN stands for ‘Feed Telstra The NBN’.

    • “Did *anyone* in the MSM (not Delimiter, but the stuff ordinary punters read) ever call out Turnbull on his fantasy that Telstra was going to suddenly give all its copper to NBNCo.”

      I think they were all too busy laying the boot in to NBNCo for other *so called* discrepancys

  13. It is worth looking at the actual quote (not just the headline).


    “It’s very important that we have optionality going forward so that we are not inadvertently put in a disadvantaged position. So, yes, (retaining control of a network asset) is an important consideration in the negotiations, but there’s a number of ways that can be solved,” he said. “We are agnostic about which one: we just need to be treated like everyone else and not to be disadvantaged.”


    At the moment, the copper and hfc is “turned off” only AFTER nbnco have completed the fibre FSAM. For many properties, this could be the best part of a decade away.

    I suspect when Thoday speaks about retaining control, he’s talking about retaining the copper/hfc until the overbuild is completed rather than just handing over the copper now, thus wringing some more value (profit) out of it over the next however many years it takes to complete an NBN (whether it be FTTP, MTM or something else).

    I’m sure Telstra prefers FTTP over MTM (all things being equal), as it takes longer to build which means more time (and therefore profits) before NBN builds their network and the existing copper disconnected or handed to NBNco as part of an MTM.

    • …but if my understanding of the MTM/Coalition proposal is correct, the vast majority of the network will never be ‘overbuilt’ – it will _always_ rely on that copper/hfc last ‘mile’ for 60-70% of the network because, hey, it’s good enough, right? It’ll also mean that people like me are in the same frustrating situation – poor quality copper (my opinion), ultra slow (1.3mbit sync speed), line drops out whenever it rains, I call my ISP, who call Optus (on Optus exchange), who call Telstra who come out on a dry day and tell me everything is fine (why should they care? They get paid whether I’m happy or not. Maybe I should just bite the bullet and use Telstra as my ISP and whinge until they fix it, then move elsewhere).

      Hands up anyone who _seriously_ believed that Telstra would let NBNCo use an asset that it owns for free at the same time shelling out money to maintain and repair said network? Even MT would leave his hand down. I don’t care what he says, I know he doesn’t believe this would ever happen…

    • i’m laughing at the disadvantaged line – they are the ones holding all the chips! there is two chances of that happening: Buckleys and none.

  14. Feds want to do FTTN:
    “Do that and we’ll build over it. Plus you can’t touch it without paying up”

    Feds want to do FTTH:
    “Yeah, ok, sure, we’ll turn it off… but it’ll cost ya”

    Feds want to do FTTN again:
    “Oh. You want this incredibly valuable copper network? What if we still want it?”

  15. How much more farcical can this get..? Turnbull’s lemon network should be exposed for what it is.. A royal commission should be called as soon as possible..

    • +1

      not profit, $7.3b revenue but still the same message to Mr Turnbull: “Wake up Princess.”

  16. Maybe this was the play all along? Turnbull puts out an NBN plan which makes Abbott and Murdoch happy but is highly unpopular in the polls, then he makes a deal with Thodey so Thodey throws a huge spanner in the works and they end up having to stick with all fibre? Was Turnbull secretly on the sensible side of the debate all along?

    *wishful thinking*

  17. How much people want to bet there will keep the deal under raps and claim it as commercial confidence

  18. People called this a whole year ago when Turnbull first came out with his FTTN policy. Everyone knew this was going to happen, that Telstra would grab the Government by the balls. The likes of, iirc, Mathew and Michael did not, or rather would not, believe that Telstra would try to get more value out of the deal, or would not believe that the great Malcolm Turnbull wouldn’t have cut a deal with them pre-election. It was a simple proposition: No demand for the copper/HFC infrastructure translates to no additional cost for it. New demand for the copper infrastructure translates to a higher price for it.

    Now let’s re-do the strategic review with this additional burden in mind. Fix all of those other doctored assumptions while you’re at it.

  19. Haha, you never know – maybe Telstra is secretly trying to help Australia get FTTP by being so difficult to negotiate with that the Coalition has no choice but to say “screw it – we’ll stick with the old plan!”

    .. but then again, it’s Telstra :-P

  20. No different to the difficulties Labor had when they first proposed FTTN – they changed to FTTP because it was going to be too difficult and costly to deal with Telstra in the first place. IMO there should never have been a deal with Telstra for changeover – NBN Co builds FTTP, the government makes Telstra scrap the CAN, Telstra are told they’ve had 25 years of monopoly to rape-I-mean-fleece-I-mean-‘extract maximum value from their asset’ – why in the world do they even deserve such generous consideration in the first place? They didn’t give such consideration to Australians while they were sucking them dry for two decades.

    The LNP are willing to throw the unemployed under a bus. It’s time they got their priorities straight and stopped the handout mentality for large corporations.

  21. How is he going to finish sooner when he hasn’t even negotiated the copper he needs yet?

  22. Telstra was never going to give the copper away. It was debatable if it even considered selling.

    Anyone paying attention prior to the election was quite frankly stating either a big lump sum for ownership shift, or ongoing rent seeking from the infrastructure owner.

    There were only ever two options. It was never a quick conversation.

    This should not be a surprise; if it is, you’re not paying attention both now or to NBN history.

    Telstra stated categorically prior to election that it would consider other options – but the existing agreement and associated payment(s) stand.

    That is fundamentally clear indication that copper still has a value.

  23. Having thought about this, Telstra keeping ownership of copper and HFC isn’t so bad, because then NBNco won’t be saddled with them when the ALP is elected and goes back to a FTTP-only model.

  24. Telstra will never give up the copper and its HFC to NBNCo. What I could see here is that copper will be more valuable in the future. Some countries nowadays are using MTM, For instance, some are using FTTN and then from the node, copper cable would usually be connected to their premises. Telstra will do their best to be competitive, as they’ve been in the business for more than a decade. Obviously, it’s not that easy for them to give up their HFC and copper cables.

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