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Hard and Fast

Telstra and NBN Co sign a Heads of Agreement - a portent of what's to come for NZ?

By Antonios Karantze, in , posted: 20-Jun-2010 17:24

Telstra has come to terms with NBN Co in a deal valued at $11 billion which will see the carrier decommission both copper and HFC telephone & broadband services.
Under the heads of agreement announced this afternoon, Telstra would provide access to Telstra facilities and progressively migrate Telstra traffic onto the National Broadband Network, subject to regulatory approval. The agreement for these terms will have an approximate value of $9 billion.
Separately, the Federal Government has agreed to progress “public policy reforms” with an attributed value of approximately $2 billion. These basically involve changes to Telstra’s current universal service obligations with the establishment of a new Commonwealth entity – USO Co – which will deliver unprofitable services. USO Co will receive a maximimum of $100m in annual taxpayer contributions with the rest to be funded by presumably increased industry contributions. It will take over Telstra’s USO obligations from 2011.
Telstra also said it has received a written agreement from the government that it will be able to participate in LTE spectrum auctions under the deal.
“This is a sound outcome for NBN Co because when finalised it can maximise the use of existing infrastructure and accelerate the roll out of its network,” NBN Co CEO Mike Quigley said in a press release.
NBN Co added that Telstra would likely become its largest customer. NBN Co will pay Telstra for migration of traffic on to the NBN and the decommissioning of its network.
The Heads of Agreement also provides for NBN Co’s use of Telstra’s “existing fit-for-use infrastructure, such as ducts, pits and conduit and a right to acquire Telstra backhaul services and space in Telstra exchanges. While there is a considerable amount of negotiation and contractual work to go, we believe this agreement is a significant step forward to creating a more competitive telecommunications industry,” Quigley said.
Telstra expects to be able to place the deal to a shareholder vote in the first half of next year. The deal is subject to both that vote and ACCC approval.




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Comment by nickb800, on 20-Jun-2010 19:48

Dissapointed the NZ media completely missed this tonight - its terribly relevant to NZ

Comment by Cymro, on 20-Jun-2010 20:35

That has some massive implications for TNZ and the next round of regulation/de-merger talks. Also suggests that NBNCo were very very worried that they wouldn't be able to compete commercially with Telstra.

Comment by oxnsox, on 21-Jun-2010 10:35

Or is it a sensible move away from the fixed network infrastructure, and all the issues of conflict that raises, when one company is trying to compete with others who don't have a legacy network to support.

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antoniosk's profile

Antonios Karantze
New Zealand

I'm a born and bred Wellingtonian, and have chosen IT and Telecommunications as my industry, as a Commercial Manager.

Credits include but are not limited to:
- The O2 Xda smartphone range, and O2's range of 3G Mobile Internet services
- Numerous TelstraClear Mobile and IP voice products

In my journey through the industry I have worked at
- Bellsouth NZ
- Telecom NZ
- ICO Global
- T-Mobile International (formerly One2One Communications)
- O2 Plc
- TelstraClear
- Vodafone NZ

I'm a fan of technology, and what it can do for people and business... and I enjoy bringing new things to market and seeing them grow. Enjoy the blog, take the time to think about what I write - it's not technology heavy, and is my reflection on life and the people around me.