Yesterday marked a significant development in Australia’s National Broadband Network. NBN Co, the company formed and charged with the responsibility of building the government’s $43 billion fibre broadband network announced they have reached an agreement with Telstra to use their equipment in the NBN build. This avoids expensive duplication of existing Telstra-owned infrastructure.
The deal includes 9 Billion dollars for the hundreds of kilometres of underground pits and pipes that house current copper and fibre infrastructure. The $9B doesn’t actually include the purchase of, but rather instead only pays for a long-term leasing agreement for the infrastructure, the length of which still remains unknown. However in an Q&A with this Telstra’s CEO David Thodey, he revealed that it won’t be something we have to worry about in our lifetime.
There’s an additional 2 Billion dollars being injected by the government. This money goes partly to compensate Telstra to assist in it’s retraining of staff for the change over. In the deal, Telstra customers will be moved over to the NBN, giving NBN Co instant adoption of millions of users.
Part of the deal will mean that structurally Telstra needs to separate into a wholesale and retail arms. Also included is the ability for Telstra to buy the wireless spectrum required for LTE or 4G mobile networks. As the digital TV transition continues, the incredibly valuable analogue spectrum will be freed up. The frequency in question is so valuable due to its ability to easily penetrate walls and travel large distances, meaning less broadcast towers are required resulting in lower rollout costs.
While all this sounds promising for consumers and shareholders a like, there is a long way to go before the deal comes to fruition.
- The coalition doesn’t win power in the next election. The have announced they will oppose the deal.
- Telstra shareholders agree to it.
- The ACCC green light it.
- The NBN Co and Telstra can agree on the fine print. The devil is always in the detail.
While the announcement happened yesterday, the election result won’t be till later this year, with Telstra shareholders voting on the deal until early 2011.
More @ NBN Co.