Telstra inks $1.6b NBN deal, ACCC raises concerns

Telstra will help with the rollout of the HFC network. Photo: Rob HomerThe competition watchdog is concerned Telstra may have advantages over its rivals in the national broadband network rollout after the telco inked a $1.6 billion  deal to upgrade the cable television and internet assets it sold to the government’s NBN in 2014.

Telstra will provide planning, design, construction and construction management services for the hybrid fibre-coaxial (HFC) network it sold two years ago to NBN with the aim of completing the upgrade by 2020.

Australian Competition and Consumer Commission chairman Rod Sims said the watchdog was concerned about the implications of Telstra’s involvement in the NBN rollout. Competitive advantage

“We have raised several concerns with Telstra and NBN Co, including that Telstra may receive a competitive advantage if it has access to better information than other service providers or if it is able to use infrastructure built for the NBN network before that infrastructure becomes available to other retail service providers,” Mr Sims said.

The ACCC acknowledged that Telstra’s technical expertise would help with a faster rollout of the NBN, but is worried that construction and maintenance deals, including Monday’s announcement, could give rise to competition issues.

The watchdog said the two parties have recently provided proposals to try to address these concerns.

“We are looking at the parties’ proposals carefully to consider to what extent these proposals address our concerns. It is important that Telstra doesn’t get a head start selling retail services over the NBN just because its technical expertise is being used in the construction and maintenance of the NBN,” Mr Sims said.

An NBN spokesperson said the deal was not subject to approval from the ACCC.

“We have already provided a significant amount of information to the ACCC.  We continue to work closely with the commission and we are pleased that the ACCC recognises that the transaction will contribute to a quicker rollout of the NBN,” the spokesperson said.

“We were very mindful of these perceived issues when we structured the deal and have also offered the ACCC additional measures around monitoring and reporting back to the ACCC.”

The spokesperson said NBN has every incentive to make sure all retail service providers have the same chance to access the network.

Telstra’s HFC footprint includes areas of Sydney, Melbourne, Brisbane, Gold Coast, Perth and Adelaide. Optus deal to come

NBN is still in negotiations with Optus over the upgrading of its formerly-owned HFC network.

NBN paid Optus $800 million for the network as part of a deal struck in 2014 during the renegotiation of contracts done under the Coalition government, which Optus, at the time, said was equivalent to its 2011 signed under the Labor government.

Fairfax Media revealed last year that NBN was considering replacing Optus’s HFC network.

The networks are an important pillar in the Coalition government’s multi-technology mix national broadband network plan, after it abandoned the previous Labor government’s plan for fibre-to-the-premise.

Opposition Leader Bill Shorten confirmed on Monday that, if elected, it would move towards a “hybrid” rollout of the NBN, involving more fibre cables, rather than revert to its previous policy.

The new deal with Telstra should come as no surprise with NBN chief executive Bill Morrow flagging at the time the two signed an $11 billion renegotiated contract in 2014 that Telstra  progressively sell its copper and HFC networks to NBN and that Telstra would be an important partner in the construction of the NBN.

The previous contracts, signed in 2011, would have seen Telstra progressively shut off its copper and HFC networks under an all-fibre rollout.

“We’re going to give them some of that business only if it’s at ­market competitive rates and I hope they respond in that way because they do have a lot of knowledge we can use,” Mr Morrow said at the time.

After signing a memorandum of understanding in December, Telstra has begun to support the build of the HFC network.

“We have a very strong relationship with NBN and I am pleased that we have reached an agreement and can support NBN in building out the NBN network in the existing Telstra HFC footprint,” Telstra chief executive Andy Penn said.

“Telstra has a long and proud history in network construction and we believe we will bring great expertise to this important part of the NBN network. We are already mobilising our workforce to ensure we support NBN in their rollout schedule.”

Mr Morrow said the new deal with Telstra would help roll out the NBN to millions more homes.

“Telstra has enormous experience in HFC design and construction, and the rollout will be greatly assisted by having them as a key partner in the delivery of this part of the network,” Mr Morrow said.

“This is a significant milestone in NBN’s goal of finishing the rollout by 2020 and connecting 8 million homes and businesses.”

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