No NBN 'go button' until Telstra deal

Although Telstra and the National Broadband Network company (NBN Co) have agreed to use Telstra's pits and ducts at second release sites, the "go button" on the NBN will not be hit until the deal is finalised, according to CEO Mike Quigley.

"We have negotiated with Telstra a way forward with those second release sites. It has been negotiated but it is not finally complete so we should be able to do something earlier," Quigley told the inaugural joint parliamentary inquiry on the NBN in Sydney this morning, but said that the full roll-out of the project will not hit its peak until the $11 billion deal with Telstra to lease its ducts and pipes is completed.

"While we have spoken to Telstra about doing a number of things, we won't get unlimited access to ducts and backhaul until those conditions are finally met. We've done a lot of preparatory work ... but we really cannot press the final go button on [to start in] volume until we have that deal finalised," he said.

According to Quigley, the deal is in the "final stages" of negotiations. In the NBN business case, NBN Co said that it was expecting the deal to be finalised in June; however, Telstra has delayed shareholder voting on the deal until towards the end of 2011. Quigley told the committee today that there will also be a number of other factors that will affect this.

"Telstra does need to do some remediation work, does need to do some work in exchanges, does need to do some re-grooming of traffic so that we can have access to the dark fibre and it needs to do some remediation of ducts. So that all needs to be sequenced and planned."

Quigley said that to proceed without the deal in place would likely end up costing the government more money.

"We need to make a decision about whether we wait for the Telstra potential deal to be finalised. In which case we have available to us an enormous number of facilities. Huge facilities in terms of underground ducts, exchange facilities and backhaul facilities," he said. "If we were to ignore those we may in fact go ahead and start building and then be building for example aerially where in fact we could have used the Telstra ducts. Or drilling underground and putting new duct in when there's useable duct on the same street for Telstra.

"It would be a bad outcome for the taxpayer and a bad outcome for the community if we had gone ahead [before] having those facilities available."

According to the executive, negotiations had been tough but as soon as the deal is finalised, NBN Co will update the milestones in the business case to account for the delay.

"We're all keen to get on with the build as fast as we can but it would be unwise to build while there were open questions on policy issues."

Diverting to address labour shortages

Although Quigley refused to reveal the budget for construction of the network, he admitted that in some areas of Australia, finding labour would be tough.

"In some places in Australia it will be relatively easy, in some places it will be much more difficult. In Western Australia, north-west Australia, it won't be easy. But we are addressing that. We're already undertaking discussions with various departments within government ... about training requirements. We've been speaking with training companies and we are having discussions with the contracting community."

The CEO said that the roll-out schedule could potentially be changed in order to ensure that NBN Co is not paying higher costs for labour in certain areas.

"If we have planned to go to this particular region, region X, and we find that labour shortages are a problem, we may have to divert for some time to region Y and then come back to region X when we have solved the labour issues in region X. We have that ability."

NBN report card

Quigley flagged that as the customers of NBN Co, the retail service providers should be able to provide feedback to government on the NBN, and he said that he will be proposing to the government that there be an "NBN report card" for which telcos can judge whether the wholesale network operator is meeting its goals.