Senator the Hon Mathias Cormann

The Commonwealth Government, NBN Co and Telstra have today signed landmark agreements that will allow the National Broadband Network (NBN) to be completed sooner and at less expense to taxpayers.

Under the agreements NBN Co will progressively take ownership of many parts of Telstra’s copper and HFC cable networks and use this infrastructure in the NBN, at no additional cost to taxpayers.

The shift to a multi-technology NBN is estimated to save about $30 billion and bring forward completion of the high-speed network by around four years, compared to the previous fibre-to-the-premises rollout.¹

The agreements amend the Definitive Agreements originally signed by the Commonwealth, NBN Co and Telstra in June 2011.  They follow a year of negotiations between the three parties.

The amendments announced today are a major step towards delivering affordable high-speed broadband to all Australians, no matter where they live or work.

They also deliver better value for both taxpayers and consumers by reducing the NBN’s cost.  While the NBN remains a very ambitious and risky project, the transition to a multi-technology rollout helps to mitigate its risks.

In negotiating the amendments, the Government has honoured its commitment to ensure Telstra’s 1.4 million shareholders are ‘kept whole’.  Telstra’s estimate of the value of the original June 2011 deal has been maintained.

Following the agreements Mr Bill Morrow, NBN Co’s chief executive officer, reaffirmed the company’s commitment to ensuring high quality broadband services are available to every Australian household and small business.

The amendments to the Definitive Agreements are subject to a number of Conditions Precedent, including consideration by the Australian Competition and Consumer Commission of Telstra’s revised Migration Plan.

Separately, NBN Co is engaged in constructive discussions with Telstra and other parties over the provision of planning, design, construction and maintenance services – potentially allowing NBN Co to tap Telstra’s capabilities and expertise in the rollout.  Any arrangements that are agreed between the parties will be on fair commercial terms and subject to regulatory oversight.  These discussions are expected to be concluded in the near future.

The NBN is the largest infrastructure project in Australia’s history. The wholesale-only high-speed broadband network is being constructed and operated by NBN Co, a Government-owned company, and will pass about 12 million homes and businesses across the nation by 2020.²

Currently the NBN connects homes and businesses using one of three access technologies: fibre to the premises, wireless and satellite.

However, since early 2014 NBN Co has been preparing to shift to a multi-technology mix rollout which will also make use of the existing copper and HFC networks where these can deliver high-speed broadband connections which meet the Government’s policy requirements.³

It is the Government’s policy to ensure all households and businesses have access to broadband services providing download data rates of at least 25 Megabits per second and proportionate upload data rates.  Nine out of ten premises in the fixed line footprint will have access to broadband providing downloads of at least 50 Megabits per second and proportionate uploads.

Between September 2013 and December 2014 the number of premises which can connect to the NBN and order services has more than doubled from 284,000 to 718,000, while the number of households and businesses with active service has trebled from 91,000 to 309,000.⁴

The Commonwealth Government, NBN Co and Telstra commenced negotiations to amend the Definitive Agreements in late 2013.  The Commonwealth was supported throughout the negotiations by financial advisor Credit Suisse. NBN Co was supported by financial advisor Goldman Sachs and legal advisor Ashurst.

Footnotes

[1] NBN Co – NBN Strategic Review, Final Report – December 2013, pages 98 & 102.

[2] Wholesale-only means NBN Co does not sell to consumers. Instead, retail service providers such as Telstra, Optus, iiNet and many others offer broadband or telephone services to consumers using the NBN network.

[3] HFC stands for Hybrid Fibre-coaxial Cable.  HFC networks were rolled out by Telstra and Optus for subscription TV in the 1990s, but are also capable of delivering high-speed broadband.

[4] NBN Co Rollout Data, week ending 8 September 2013 and week ending 4 December 2014.  These figures include 48,000 premises able to access the NBN Interim Satellite Service and exclude unserviceable premises.