Slow progress on Telstra renegotiation

Malcolm Turnbull appears to be having more difficulty with the renegotiation of NBN Co’s deal with Telstra than he thought he would.

In Opposition, Malcolm Turnbull said the renegotiation of the Definitive Agreements with Telstra would be quick. It is now eight months this week since the Abbott Government was elected.

Today in hearings of the Senate Select Committee on the NBN, it was revealed that NBN Co has not been able to begin trials of its second rate fibre-to-the-node system because they have still not reached an agreement with Telstra on access to the copper network.

The hold-up could be because NBN Co Executive Chairman Ziggy Switkowski fundamentally disagrees with official NBN Co advice on what to do about the copper.

Dr Switkowski told Inside Business this year that he expected that the negotiations with Telstra would result in NBN Co owning the copper network.

“I think the outcome of these negotiations should lead to a situation where the copper network, the ownership, is transferred into NBN.” – Ziggy Switkoswki, Inside Business – April 8th 2014.

However the NBN Co advice prepared for the incoming government clearly contradicts this approach. It argues that acquiring the copper is a “very high risk approach” and instead it favours a lease or managed service arrangement for NBN Co access to the copper.

NBN Co gave this strong advice on the basis that very little was known about how much the old copper network would cost to fix, how much it would cost to maintain, how difficult it would be to predict its longevity and most tellingly, how difficult it would be to negotiate the acquisition of the network from Telstra.

Malcolm Turnbull gilded the lily when he told the Australian public earlier this year that negotiations were moving quickly. Now that we know they are progressing so slowly that trials cannot even begin on the Coalition’s second rate copper based network, he should come clean on what is really going on.

MONDAY, 5 MAY 2014