Telstra deal bad for taxpayers: Turnbull

Shadow Communications Minister Malcolm Turnbull and Liberal MP Paul Fletcher have said that the definitive agreement that NBN Co has reached with Telstra is no good for taxpayers or telecommunications competition, while the Greens praised its completion.

Shadow Communications Minister Malcolm Turnbull and Liberal MP Paul Fletcher have said that the definitive agreement that NBN Co has reached with Telstra is no good for taxpayers or telecommunications competition, while the Greens praised its completion.

Turnbull has said that while the deal might be great for Telstra's shareholders, he didn't think it would deliver value for taxpayers.

"Telstra understandably negotiated the best deal for its shareholders. Senator Conroy negotiated the best deal for Labor's political interests. But no one at the table sought the best deal for the millions of Australians whose taxes will bankroll the $50 billion NBN and pay Telstra to scrap its copper network," he said in a statement.

He also said that the deal would mean that broadband prices would be high, and stay high, and that with customers moving from Telstra and Optus' hybrid-fibre coaxial (HFC) networks, competition would take a blow.

"Right now, many Australians are using very fast broadband over the Telstra and Optus HFC cable network. That network could have provided real competition for the NBN, and, in doing so, kept prices low, but in this extraordinary deal those HFC networks will not be allowed to compete with the NBN. The ability of the monopoly NBN to charge high prices will be unchallenged," he said.

He also attacked the $500 million breakup clause to be paid to Telstra if the NBN is cancelled, and the fact that the deal didn't include the transferral of ownership of Telstra's copper to NBN Co. Telstra is only leasing its infrastructure, except the last few meters from the house to the door, which will belong to NBN Co.

He called the universal service obligation funding (making sure payphones, emergency services and standard calls are available) of $290 million per annum for the next twenty years as "extremely generous", as it was "up to $5.8 billion for services, which if the NBN is rolled out, Telstra will only have to offer to 7 per cent of Australians".

He also criticised how long it will take for Telstra to become fully separated.

Fletcher echoed Turnbull's comments, saying that competition would suffer in the wait for the NBN.

"Despite the rhetoric, for at least the next decade, Telstra's network will be the only network connected to a very large number of homes in Australia," said Fletcher.

"Over that time, the government plans that the number of homes served by the NBN will gradually rise but, even if it meets its ambitious timetable, the job will not be completed until 2020. And it is already running well behind the timetable. The NBN Co corporate plan said there would be around 1.27 million homes passed by fibre by 2013, but they are running well behind schedule, with less than 1000 services in place right now."

He said that the delay meant that the rules set for how Telstra behaves while it's still vertically integrated are particularly important. These are set out in the draft structural separation instruments released earlier this month.

"It is clear from this draft document that the Gillard government is giving Telstra a very soft ride," he said.

"The government's stated objective is to impose upon Telstra a requirement that 'industry is able to access Telstra's copper network on a transparent and equivalent basis' during the transition period.

"It is clear that this is nothing like tough enough to impose real competitive safeguards on the vertically integrated monopolist."

He said that the arrangements should specify that Telstra publish transfer pricing lists. He also criticises the lack of a requirement that arrangements be overseen by an independent body.

"If the Gillard government does not materially toughen up these arrangements for the interim period, it will be very bad news for competition and for the large number of Australian telecommunications consumers who will still be using Telstra's network."

Meanwhile, the Greens have welcomed the agreement, and that struck with Optus, saying that it rejected the "fatal half-measures" proposed by the Coalition.

"Today we heard the Opposition communications spokesperson claim that, if elected, the Coalition will leave those parts of the NBN already existing intact, but that the remainder of the network would be a hodgepodge of Fibre to the Node (FTTN), wireless and Fibre to the Premises — a flawed model, which was roundly rejected in the 2010 election campaign. This suggestion has nothing to do with communications reform," Greens communications spokesperson Scott Ludlam said.

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