Telstra delivers NBN ultimatum

Stuart Corner
Tuesday, 14 October 2008 17:54

Opinion and Analysis

He then spelt out Telstra's demands before it will agree to build the NBN. "Telstra requires the Federal Government to rule out any further separation. Let's understand something - we have an integrated business model and any potential bid from us has to include assumptions about the integrated business operating model, which flows through to assumptions around our cost structure, which in turn leads to what prices will look like.

"Any further separation WILL impact the timing of the build and therefore cost and price. Our bid can only be put forward when we know we can apply our integrated company structure."

He seems to be suggesting that, Telstra's promises of open access notwithstanding, Telstra will gain some advantages from its ownership of the NBN thanks to its vertical integration. Surely this is a powerful argument for structural separation: to ensure that no company providing services on the NBN gains any advantage from its ownership of that infrastructure.

Finally, Stanhope warned that: "If any other bidder's business case relies on Telstra being an anchor customer on its network it needs to go back to the drawing board. Telstra will compete hard using our existing network assets and the resources available to us to provide consumers and businesses the choices they deserve.

"Let me be clear on a couple of points. There isn't a 20 percent chance we will 'make love' with the government and create a separated NBN JV as has been suggested – there is a zero percent chance. There is not a four percent chance we vend our last mile into a Terria / Commonwealth / Telstra consortium to appease the ACCC - there is a zero percent chance.

It's becoming very clear that the Government has two choices on the NBN: let Telstra build it on its terms or introduce some major regulatory change that will enable somebody else to gain the access to Telstra's network needed to build it, and the freedom from Telstra competing with the NBN to make the project viable.