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

'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.

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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, Telcos, Telstra, Australia

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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4 comments
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  • A depreciated asset ...

    Mmm .. for tax purposes, no doubt, Tlestra would have depreciated the value of the copper down to 'nil' many many years ago. (This didn't of course stop them from imposing enormous monthly line rental charges in the last few years for this 'nil' value asset ... but how else were they to suck the country dry and force us onto mobiles and their competitors.)

    That said, and if anecdotal evidence from maintenance personnel and technicians is to be taken seriously, it has become a real maintenance stone around their neck after years of neglect. When they put the copper in, it was on a typically over-engineered network with lots of redundancy ... but now a lot of that redundancy has oxidised into little blue patches of copper oxide, faulty joints and splices, and is a nightmare to use and service ... with the incidence of 'unrepairable' (meaning can't be fixed by jury-rigged splicing any more) faults exploding.

    The NBN and the government may find that they've taken on a lodestone around their neck with Telstra's copper - but that's not Telstra's concern. As far as they and their shareholders are concerned they've gotten a great deal for an asset that technically, in accounting terms and as a written down asset was worth little or nothing.
    Frank O'Connor
    • Agreed on all points

      It just saddens me no end Turnbull and co are pissing so much of Australia's citizens money up a wall. Useless. Leave the copper to rot in the ground and use any existing pipes and pits to pull fibre. Stop wasting our damn money trying to force old technology into a new world.
      Ramrunner-5dd3e
  • It's the 11bln helping Telstra grow

    NBN is "not obliged to use "...the monopoly duct and exchange assets...give me a break.
    The only equitable solution is for Telstra to be split, so every one has equitable access to the ducts and exchanges. Everyone, including Telstra must then pay the same prices for access, and only then does the playing field level up - when Telstra no longer get a free ride using the ducts and buildings, and the costs become transparent.
    The shareholders can have shares in the new company, nothing is being sold, it's just being split, so no-one should lose.

    The present situation is a massive policy failure, a Telstra sandwich with NBN meat. Telstra extracting economic rent from monopoly assets which it uses as free cash to spend on other things, such as aggressive expansion of mobile networks. No wonder Vodafone are fuming, the government are subsidising their competitor.
    Trebus
  • Forsight is a great thing.

    We have to ask ourselves what the hell was the government of the day thinking when it sold off pretty basically was Post Master Generals branch of telecommunications, no body in this decision had a clue other than short term gain. The PMG was an organization loaded with fully trained experts in creating and maintaining the utility of the day, as the technology progressed they adopted what was at the time bet practice and trained their technicians to implement new technologies. With the pool of fully trained and experienced experts available what would have the story of implementing the NBN FTTH system in this country. I would wager that the it would have been done with the minimum of fuss, the minimum of political interference and with the trained resources already in place could have been done in half the time at half the cost.
    BoomerMMW