NBN-Telstra deal 'in the home stretch'

NBN Co's renegotiation with Telstra over access to its copper network is in the 'home stretch', according to CEO Bill Morrow.
Written by Josh Taylor, Contributor

NBN Co CEO Bill Morrow is still optimistic that the company will wrap up negotiations with Telstra over access to its copper lines for fibre to the node before the end of 2014.

"The talks with Telstra are on the home stretch and things are in good shape with Optus," Morrow told journalists in a results call with journalists on Thursday.

"Quite obviously, any deal needs to be ratified by the government and needs to receive the seal of approval from the ACCC. I'm confident this is going to proceed in a reasonable time frame."

The renegotiations of the AU$11 billion deal with Telstra to allow NBN Co to instead access Telstra's copper lines and hybrid fibre-coaxial (HFC) network as part of NBN Co's new multi-technology mix model that moves away from fibre to the premises was originally expected to be finished by the middle of 2014. Telstra CEO David Thodey recently reportedly said that the negotiations could extend beyond this year, but Morrow said it is likely to be finished before then.

"I don't think this is an issue that extends into next year. The issues we're dealing with right now are more language oriented than they are in terms of materiality," he said.

The Australian Competition and Consumer Commission (ACCC) and government approval would, however, extend into 2015.

"I would expect that to happen without any unforeseen circumstances entering the fray," he said.

ZDNet understands that a deal between Optus and NBN Co to hand over Optus' HFC network has been all but completed, but NBN Co and the government will wait for the Telstra deal to be finalised before signing off on it. Morrow confirmed that the two deals would be finalised at the same time.

"The Optus one is a little more straightforward, but the two are going to want them done at the same time, where if it was just Optus, I expect it would be done sooner."

NBN Co is also creating a separate HFC division in the company to allow it to consider how to integrate the existing assets into the NBN rollout, Morrow said.

"It is an intricate task, and has many different processes from fibre to the node," Morrow said.

In NBN Co's first-quarter results released today, the company said that the number of premises able to order a service on the NBN grew by 16 percent to 640,000, with 267,000 active services on the network and a 32 percent growth in revenue to AU$29 million.

Earlier this month, iiNet revealed that one of its customers on the New South Wales central coast trial of fibre to the node was only able to get 50Mbps download speeds over the copper line 640 metres from the node, despite the average download speed on the network being around 90Mbps, with 50 end users on the trial.

NBN Co's chief operating officer Greg Adcock said that 8 percent of the customers are on speeds of lower than 50Mbps.

"Of the 50-plus customers that are on the trial up there, there are only four that are getting under the 50Mbps, and we're looking at them all very closely, and we're learning for the broader rollout," he said.

John Simon, NBN Co's chief customer officer, indicated that those customers are over 700 metres from the node.

"What we're seeing is that the 90Mbps average is being delivered for premises between 300 and 500 metres from the node. Obviously, as you go further away, the line rate on the copper drops and it comes down to closer to 50Mbps where it is 700 to 800 metres out. Still very good performance in terms of overall speed," he said.

Simon said that NBN Co would look to learn more from the limitations of fibre to the node from the broader trial.

"This is an early trial. Part of the extension on this is when we commercialise the 1,000-node trial, we'll be broadening and getting a larger user group to make sure we've got a bigger and more accurate statistical sample," he said.

Morrow added that NBN Co has an obligation from the government to ensure that 90 percent of premises in the fixed-line footprint have access to a minimum of 50Mbps down, and that no premises will get less than 25Mbps download speeds.

"We're working through all of those issues and trying to understand just how many homes will fall below that 50Mbps and below the 25Mbps, and what alternative solutions we're going to be able to provide to them," he said.

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