Telstra picks up AU$1.6 billion HFC contract from NBN

Australia's incumbent telco has picked up a deal to design and manage construction within its HFC footprint.
Written by Chris Duckett on

The company responsible for deploying the National Broadband Network (NBN) across Australia has signed Telstra to provide design and management services within its HFC footprint.

In an announcement to the ASX this morning, Telstra said the deal would run until the end of the NBN build, currently slated for the end of 2020.

"All design, program management, construction management and scheduling activities will be undertaken by Telstra," Australia's largest telco said.

"Construction is split into two areas -- field construction activities will largely be performed by NBN's MIMA [Multi-technology Integrated Master Agreement] partners, while in-exchange construction activities and limited upstream in-field activities will be undertaken by Telstra."

In December, NBN signed a memorandum of understanding with Telstra that saw Telstra pick up design, engineering, procuring, and construction within its HFC network, as well as undertaking to upgrade the HFC network to DOCSIS 3.1.

NBN said at the time that it would have been too difficult for NBN and Telstra to coordinate on each building out the HFC network, with services possibly disrupted due to the necessary node splits, with NBN therefore taking a step back and handing over management work to Telstra.

HFC will connect four million premises in total, with 3.6 of these coming from the old Telstra HFC network.

At the same time, Telstra signed two contracts with NBN worth AU$80 million in first-year revenue that would see the company repair faults on the copper network and other NBN services.

Last week, NBN revealed it was spending AU$60,000 a day on external lawyers, with a total of AU$8,694,204 spent between September 14, 2015, and January 31, 2016.

On Friday, Australian Opposition Leader Bill Shorten confirmed in a speech that Labor is looking towards a hybrid NBN policy with more fibre.

"We won't rip up everything that Mr Turnbull has done," Shorten said. "We will do a hybrid of some of what he's done, but we will have in our announcement -- which we will be putting out pretty soon -- a greater proportion of the use of fibre, and we will also look at the proportions of fibre, and we think we can provide more of that to more Australians."

Communications Minister Mitch Fifield labelled this statement a backflip from Labor's previous stance on the NBN.

"For two and a half years, Labor has attacked anything other than a network that built fibre to the premise, and attacked any use of the existing copper network. Last night, Mr Shorten confirmed that Labor would adopt the Turnbull government's multi-technology mix."

Telstra and NBN signed an amended AU$11 billion definitive agreement in December 2014, that saw NBN take on ownership of Telstra's legacy copper and HFC networks.

ACCC expresses concern over deal

In response to today's announcement, the Australian Competition and Consumer Commission said while Telstra had the expertise to speed up the rollout of the NBN, it was still worried about the impact on competition.

"We have raised several concerns with Telstra and NBN Co, including that Telstra may receive a competitive advantage if it has access to better information than other service providers or if it is able to use infrastructure built for the NBN network before that infrastructure becomes available to other retail service providers," ACCC Chairman Rod Sims said.

Sims also said it was important that Telstra did not gain a head-start to selling retail services on the NBN.

NBN said it was mindful of "perceived issues" when it structured the deal, and included additional measures on monitoring and reporting back to the ACCC.

"This agreement is not subject to ACCC approval," an NBN spokesperson said.

"As we are an open access wholesale only, non-discriminatory operator, we have every incentive to make sure all internet providers have the same opportunities to access our network as quickly as possible."

Updated 12.56pm AEST 11 April 2016: Added ACCC and NBN responses.


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