'Re-nationalised' copper NBN allows Telstra to grow elsewhere

Summary:Telstra's stake in fixed networks will be significantly reduced once NBN Co 're-nationalises' the copper network and buys it back from Telstra, according to CEO David Thodey.

The Australian government buying back the copper network from Telstra almost 20 years after selling it to the public is a way for Telstra to move away from fixed line services, according to CEO David Thodey.

Under the framework for a revise agreement between NBN Co and Telstra, the former government-owned incumbent telecommunications company will progressively hand over its copper and HFC network assets to NBN Co that will be used as part of a "multi-technology mix" model of the NBN that includes HFC and fibre to the node, in addition to the existing fibre to the premises, fixed wireless and satellite services.

Under the old agreement, Telstra retained ownership of the copper, which the company has said was a safeguard against potential policy changes by future governments while the NBN was being rolled out.

Asked on ABC radio this morning whether Telstra, which is rapidly expanding in other areas outside of the telecommunications industry such as cloud computing, software, and content, would ever sideline its fixed line business, Thodey said that the NBN was in part doing that for Telstra.

"In a funny sort of way, the NBN, or the re-nationalisation of the copper network, is making that happen by default. Because in effect, the government has bought back the copper network from Telstra they sold to the public nearly 18, or 19 years ago," he said.

"So by definition, that has been compartmentalised and put to the side. I think that is a reality, but also we're still building a lot of fibre for our business customers as we have been doing for the last 20 years."

The company has faced criticism from Vodafone and iiNet this week over the advantage Telstra has over its competitors due to the funding it is receiving from NBN Co for the network assets, infrastructure and construction of the network.

Thodey said NBN Co is "not obliged" to use Telstra's services, and said it was an unfair to say other companies could not compete with Telstra.

"I don't think that that's a fair characterisation. We compete in many different markets, and it is a heavily regulated market in the fixed environmenet. The wireless market is completely open, and these are international companies the last time I looked at Vodafone and SingTel," he said.

"We are an Australian company, who are trying to really build great products, and services, and serve our customers better. I think these companies have got a choice to invest or not invest, and that's their decision. If you invest, you take the risk with it."

As Telstra reports record profits, the company has also had close to 1,500 jobs cut in the last financial year. Thodey said that Telstra's expansion in other areas had seen a net growth in employment for the company, and said that more jobs would move to Asia as the company expands in that market.

"Call centre jobs [will be] less in the future. Now that doesn't justify offshoring, but for us, we've got to become an Australian company doing business in Asia," he said.

"Many of our customers over the next five to ten years will be Asian-based, not just Australian. There's many considerations we go through in terms of off-shoring.

He said that call centre jobs wouldn't exist in five years in Telstra, as many customers moved to interact with Telstra online.

"In reality, these jobs won't exist in five years. As difficult as that is to face into, we have to. The off-shoring is a temporary sense, in some sense, for us as well," he said.

Despite the move to grow into Asia, Thodey said Telstra would remain an Australian company.

"Our vision is to become more of a global technology company. It doesn't mean our roots will not always be in Australia, but we need to go and tap into new markets and new opportunities," he said.

Topics: NBN, Australia, Telcos, Telstra

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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