NBN news round-up: Telstra refuses to budge on $11bn contract sum; NBN Co fudging rollout numbers?

By Andrew Collins
Tuesday, 12 March, 2013

NBN news round-up: Telstra refuses to budge on $11bn contract sum; NBN Co fudging rollout numbers?

ITnews last week reported that NBN Co has been fudging the numbers on broadband rollout in an attempt to cover up delays in deployment of the National Broadband Network.

The news website posted a long analysis of NBN Co’s numbers, but the core argument is this: NBN Co has been connecting fewer premises than promised at each site, allowing it to move on to connecting new towns and cities. This gives the impression that the rollout is progressing swiftly across the nation, when in fact the overall number of premises connected is much lower than appearances indicate.

“Between January and February this year, NBN Co indefinitely delayed the rollout of a total of 69,500 fibre connections promised to cities and towns Australia-wide, redistributing them among 37 existing rollout areas and two new ones,” the website claims.

The article has sparked arguments throughout the industry. A representative from NBN Co-accredited RSP of NBN services, SkyMesh, posted a rebuttal and critique of the ITnews analysis on broadband discussion forum Whirlpool.

NBN Co responded to the ITnews analysis, saying it was “not supported by the facts”.

“IT News has claimed that NBN Co is deliberately manipulating its figures in order to make the rollout appear larger than it is. The assertion is entirely untrue,” read a statement from Peter Ferris, Executive General Manager Planning and Design, NBN Co.

“No previously announced construction modules have been removed from the construction program. No areas are ‘losing previously-promised fibre connections’,” it continued.

“Furthermore, ITNew’s (sic) claim that ‘towns and cities have disappeared’ from the rollout is not supported by the facts. It looks to be based on an erroneous assumption that FSA boundaries are fixed over time.”

Ferris claims there are many “errors of fact” in the ITnews report, including a misunderstanding of fibre serving areas (FSA) boundaries.

ITnews stood by its story, saying NBN Co’s statement “ignores the central theme of our analysis: that parts of the rollout are slipping or delayed”.

“NBN Co’s statement does not address these delays. It evasively argues that the story is incorrect because we said these connections had ‘disappeared’. It‘s a play at semantics that doesn’t hold any weight against our analysis,” ITnews said.

The ITnews analysis and subsequent discussions are complex but well worth reading. Everyone interested should hit the links above, have a (long) read and make up their own mind.

Satellite deal

NBN Co last week announced a $300 million deal with French company Arianespace to build and launch two rockets that will supply satellite services as part of the NBN.

The rockets are slated for launch in 2015 and NBN Co expects them to supply broadband services to up to 250,000 households, farms and businesses in remote areas of Australia.

The following day - March 5 - another satellite provider, O3b, said it would launch four medium orbit satellites on 29 May this year that would provide 1.2 Gbps services across Australia.

The NBN’s satellite services are expected to hit only 25 Mbps download/5 Mbps uplink.

Telstra refuses to renegotiate

Telstra last week announced it would not renegotiate the sum of the $11 billion deal it signed with the current Australian Government if the Coalition were to gain power in September.

“We have a contract with the government and we know what value we need to participate. And that’s really the end of the story,” he said. “In terms of the value our shareholders agreed to receive from the government and NBN Co, the deal has not changed,” Telstra CEO David Thodey said.

The deal as is stipulates that Telstra will receive a compensation package totalling $11 billion for decommissioning its copper network as the fibre-based NBN spreads across the nation.

As the Australian points out, Thodey has left the door open to renegotiate the types of technology and the way in which they are deployed under the contract.

“Speaking on behalf of the shareholders, if there is a different way to make up that value, we are happy to talk about it. But at the end of the day, we are making available for a price this infrastructure to allow the government to implement this policy,” he said.

Shadow Communications Minister Malcolm Turnbull welcomed the comments, according to The Australian.

“We are confident that we can negotiate satisfactory access to copper in areas where we’d want to build a network on a fibre-to-the-node basis and we entirely understand Telstra will expect to keep its shareholders whole,” Turnbull said.

“In fact, our proposal could be somewhat better for Telstra shareholders because we will be able to pay them decommissioning fees sooner,” he said.

But Communications Minister Stephen Conroy was dubious, saying: “Malcolm can sprinkle pixie dust around and say, ‘I’m going to deliver a renegotiation with Telstra’. I invite him to sit down, and he may be able to renegotiate, but they’re still going to get the same value. And Australia is going to get a second-rate network that has to be upgraded in the future.”

Image credit ©iStockphoto.com/Vadym Volodin

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