The Federal Government and Telstra have agreed on terms of engagement for the gargantuan task of transferring Telstra's eight million customers to the National Broadband Network (NBN).
Although an important step in the process of Telstra's separation, the agreement announced today does not include commercial terms. At Telstra's last Investor Day, chairman Catherine Livinsgtone said that the job of transferring customers to the NBN's fibre network would mean shifting 4,000 homes to it every day for eight years. The agreement and transfer of customers is critical since it impacts the time the NBN Co is expected to turn a profit.
"The terms of engagement include a preferred model for any agreement between the parties that would see a progressive transition from Telstra's copper access network to a fibre-to-the-premises NBN," both Telstra and the Government said in separate statements. They have not publicly released the terms.
"The update on progress made today by Telstra and NBN Co demonstrates that both parties continue to work constructively," Communications Minister Stephen Conroy said in a statement.
The minister has been under pressure to come up with a solution to his proposal to separate Telstra. The separation is being negotiated as the government waits to restart its campaign to have its Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 passed. It has been deferred for debate in parliament until early 2010.
"While there are many complex issues still to be resolved before any final agreement is reached, I remain optimistic that both parties can find a mutually acceptable outcome. I thank the parties for their hard work and determination in moving these negotiations forward," said Conroy.
The agreement does not settle the question of whether Telstra will transfer its assets to NBN Co and if so, how that would occur or what price would be paid. However, Telstra said it was discussing "commercial wholesale arrangements for the NBN Co to use Telstra's passive infrastructure (including ducts and exchange space) and backhaul", suggesting the government may not actually buy all of Telstra's passive access network, but rent it.
Separately, the NBN Co has released a statement that it believes that the most "sensible solution" for the industry is to share passive infrastructure wherever possible, such as exchanges, backhaul and ducts.
In what appears to be a sign of good faith, Telstra has agreed to share a limited amount of its engineering information to help inform the NBN Co of "practical issues" related to brown-field deployments.
"This field trial, which will see Telstra upgrade its network to fibre to the premises in a selected location, will begin immediately in the suburb of Point Cook in Melbourne's West."
Telstra said there was still uncertainty as to whether all stakeholders and regulators would approve a final agreement.