Telstra continues to maneuver its way into purchasing the National Broadband Network (NBN) from the federal government.
Telstra has announced that it plans to split into four operating businesses under a new holding entity to be known as Telstra Group, subject to the approval of its shareholders. The four new businesses will include InfraCo Fixed, which will house the telco’s fixed-line telecommunications operations, such as the fibre, data centres, and exchanges.
However, Telstra CEO Andy Penn noted that it would need to demerge InfraCo Fixed from its new business structure in the event that it decided to buy NBN Co from the federal government when it is eventually sold:
“To contemplate a business combination with NBN at a future point in time, it would probably require a more substantive delinking of InfraCo Fixed and the Telstra Group as we would need to be not vertically integrated”…
Communications Minister Paul Fletcher has previously made clear that the governing legislation prohibits vertically integrated telcos from a tilt at NBN.
Rival telecommunications companies recently attacked the notion of Telstra purchasing the NBN, arguing that it would be detrimental to taxpayers, competition and consumers:
Optus’ vice-president of regulatory and public affairs Andrew Sheridan said Telstra had already gleaned huge financial rewards from agreeing to relinquish its infrastructure dominance to the NBN, and that a spun-off Telstra division would not be sufficiently independent to prevent the kind of lopsided commercial agreements that existed before NBN’s inception.
“I think it would be a terrible outcome for Australian taxpayers, competition and consumers to think that we can somehow allow Telstra to buy back the NBN, when that would effectively shred 10 years worth of competition policy,” Mr Sheridan said…
I couldn’t agree more. One of the reasons why the NBN is so expensive is the former Gillard Government struck a deal with Telstra to pay the company $11 billion in instalments in exchange for its fixed line customers migrating to the NBN.
This decision was made to break the vertical monopoly created by the Howard Government when it privatised Telstra in the late 1990s, which handed the telco control of both the wholesale and retail telecommunications networks.
Allowing Telstra to purchase the NBN risks repeating the same mistake, reinstating a form of vertical monopoly; albeit under the guise of separate operating units.
As noted recently by Terry McCrann, “the government can borrow the, say, $50bn to fund the NBN at 1 to 2 per cent, depending on term and maturity and timing”. Therefore, it makes far more sense to keep the NBN in public hands to safeguard competition, taxpayers and end-users.
