Image credit: rpongsaj
Today was a very important day for the NBN Co and the National Broadband Network. This morning Senator Stephen Conroy along with Prime Minister Julia Gillard announced an 11 Billion dollar deal with Telstra had been reached. The details of the agreement are extensive, but the only checkbox to tick is the approval of Telstra Shareholders and the ACCC. Both of these are more of a technicality than a serious hurdle, hence today’s announcement being made now.
For a minimum of 35 years, NBN Co will have access to and use the Telstra infrastructure including fibre to create the NBN. This avoids what would likely have been a much more expensive option of NBN Co building it out themselves. Originally when the plan was tabled, the government spoke about a ‘long term lease’ which was believed to be around 99 years. In reality, 35 years is a long time, particularly when you think internet services started in Australia just 20 years ago.
The deal includes a transition plan for all BigPond customers to be progressively moved over to the NBN, meaning user adoption of the NBN is now a foregone conclusion. While Telstra will decommission its copper network, and even pull equipment out of exchanges, it will continue to offer Pay-TV over the HFC network in cities.
Total payments over time are estimated to deliver approximately $9 billion, with the additional $2 billion going to changeover costs incurred like retraining staff.
Not to be left out, a deal between Optus and NBN Co was also struck. Optus are now on-board and will transition their customer-base on HFC to the NBN progressively. The agreement with SingTel Optus Pty Ltd will net them a $800 Million. With Optus and Telstra both confirmed to transition customer to the NBN, that will secure around 60% of the users online. Other ISP’s who use Telstra infrastructure will have little choice but to move and why wouldn’t they if they can avoid the Telstra wholesale premium.
There is an out clause for Telstra, if less than 20% of customers are signed up, then they can opt out. Once past this point, if the government were to change and wanted to redact on the contract, tax payers would incur a $500 Million penalty.
So the only question now is when will you get the NBN ? Unfortunately NBN Co only release immediate rollout sites. Most likely regional areas will be in the next 3-5 years and city areas in 5-8 years.
A big day indeed.