Telstra has struck a deal with the federal government to launch a 5G fixed wireless broadband service that will compete head-to-head with the National Broadband Network (NBN):
Communications Minister Paul Fletcher said on Tuesday he was confident Telstra’s decision to compete with the NBN on 5G home broadband would not violate the definitive agreement signed by the two parties.
Telstra’s “5G Home Internet” product, delivered over its mobile network through a wireless modem, will offer download speeds of between 50 and 300 megabits per second for $85 a month, with a monthly data allowance of 500GB.
The pricing and speeds mean it will offer similar value to the NBN’s 50 and 100 Mbps plans…
Telstra’s 5G fixed wireless is likely to be of most value in the parts of the NBN that are on the unreliable fibre-to-the-node connections…
The telco’s decision has raised questions over whether it breaks the definitive agreement Telstra signed with NBN, in which it agreed not to compete with the NBN on home broadband connections for 20 years, in exchange for payments every time NBN transfers Telstra customers onto its own network.
Asked whether he believed it was consistent with this agreement, Mr Fletcher said: “In the broad I do. I’m sure Telstra has considered this extremely carefully and worked through the provisions of the clause.”
Make no mistake, Telstra is the biggest winner from the $51 billion NBN debacle.
In 2011, the Gillard Government struck a deal to pay Telstra $11 billion in instalments in exchange for its fixed line customers migrating to the NBN. And these installments have fattened Telstra’s pockets ever since:
Gillard’s decision to pay installments to Telstra was made, in part, to fix the structural mess created when the Howard Government privatised the telco in the late-1990s, which gave Telstra control of both the wholesale and retail fixed line networks and created an integrated vertical monopoly.
While Telstra has lined its pockets through billions of dollars in annual installments, it has also actively undermined the NBN’s margins by demanding deep price cuts to its wholesale charges, and now wants to steal market share via its 5G broadband rollout.
After destroying NBN’s profitability and value, the next logical move by Telstra is to acquire the NBN’s wholesale network at a peppercorn price.
Then the circle will be complete. Telstra would have first offloaded its wholesale network for $11 billion and then effectively purchased it back from the NBN at a heavy discount.
Telstra is playing chess while the federal government and the NBN are playing checkers. Telstra stands to win large as Australian taxpayers are reamed mercilessly.
