The recent fracas between the Opposition communications spokesman Malcolm Turnbull and Business Spectator’s Alan Kohler sparked a couple of interesting questions, especially with regards to the hidden implications of Turnbull’s fierce riposte.
For one, we will have to assume that Turnbull does indeed have fully costed plan, with the supposed savings of $20 billion. The other thing implied in Turnbull’s response is that he must know that the Coalition’s NBN can be executed as planned.
That in turn would indicate that he has cleared all roadblocks with Telstra, with Turnbull and Telstra boss David Thodey reaching an in-principle agreement.
The interesting thing here is that if the assumptions are incorrect then perhaps Turnbull’s display is doing the public a disservice. Alternatively if he has reached a certain understanding with Telstra, including being given full/partial access to the 2008 Telstra FTTN plans, then shouldn't we be informed of the terms of the deal?
As it will be taxpayer dollars being poured into this scheme, backroom deals needs to be made public well before the election, the earlier the better.
To keep things in perspective, here’s what happened with Telstra and the NBN a few years ago.
The telco’s February 2008 tender for up to $4.7 billion was rejected because "a solution mooted by Telstra was unacceptable to the ACCC".
Telstra owned the copper distribution network and were not about to give up control of it, or allow unfettered access to its core asset. It took change of leadership at Telstra, some heavy handed tactics from the Labor government and the promise of billions to get hold of the copper.
So the public needs to be informed of any deal that Turnbull has already reached with Telstra, which has a long history of pursuing monopolies.
It’s also important to bear in mind that the Structural Separation Undertaking legislation doesn't mandate a transfer of assets. It mandates a relinquishing of their use but not their removal when an alternative (FTTP NBN) is made available.
We are only at the very beginning of the transition and Telstra still has many options. In this context, it’s in Telstra's interest to be engaged in an FTTN – they will have the government fund the actual build in exchange for them contributing an impaired asset, most of which is most likely already fully depreciated.
In return, they might be expect to be given 49 to 50 per cent ownership of the wholesale FTTN-NBN company. Because of the politics and Telstra's commercial interests, it only makes sense for Turnbull to not fold the FTTN into NBN Co, but to create another company, possibly "related" so that it comes under the SSU legislation.
Not only does this stop NBN Co in its tracks but it also sets up a fire sale with Telstra as the only viable purchaser. All we have to do is look to the HFC rollout attempted by Optus for proof that Telstra is quite prepared to write off plenty of dollars and sacrifice profitable new businesses to protect their monopolies.
With this scenario in mind, these are questions that Mr Turnbull should be answering about the Coalition's NBN:
1) Just who is going to own the company that will do the FTTN-NBN roll-out?
2) Is Turnbull prepared to guarantee that NBN Co will be left with a competitive business model, able to service debts and commitments already entered into?
i) If NBN Co are forced to take on the FTTN, what arrangements will be made for existing staff who may not want to continue under the altered circumstances?
ii) Will he be giving the contract to Telstra? What then of the SSU?
iii) Give the contract to NBN Co? How will that integrate with their work?
iv) Create a new entity for the FTTN-NBN and would such an entity be wholly Govt owned for shared with Telstra?"
3) Where is he going to get the detailed FTTN deployment plans?
i) Will he acquire them from Telstra or rely on Telstra to give up in-confidence commercial data and Intellectual Property?
4) Will he make any guarantees about the service provided?
ii) And will ASIC or the ACCC regard those promises as mere political puffery or commercial statements, misleading, and actionable, if false?
How can he guarantee "$20 billion in savings" if they don't appear on the Federal Government balance sheet?
Do you have any question for Malcolm Turnbull about his NBN plans? Let us know in the comments below.
This is an edited version of a blog post originally published on August 31. Steve Jenkin has spent 40 years in ICT in wide variety roles including large and small software projects, 7 years writing real-time Exchange software in a Telco and Admin, Software and Database work on PC's Unix/Open Source software and mainframes.