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Is Telstra Set To Get It’s Hands On NBN Co Via InfraCo After Successful COVID-19 Baptism?

Will the now highly succesful NBN end up owned by a separate division of Telstra called InfraCo despite Telstra CEO Andy Penn being being one of the harshest critics of the National Broadband network?

It now appears that Communications Minister Paul Fletcher has left the door open for Telstra’s infrastructure arm to acquire the National Broadband Network according to the Australian Financial Review who recently interviewed the Minister.

Fletcher claims that the provisioning of a $1.6 Billion debt facility provides the future capital for NBN Co to upgrade the network which has been praised due to it’s robust performance during the COVID-19 lockdown despite unwarranted critisism from the likes of Nick Ross a former ABC journalist who has led a relentless campaign against the roll out of the NBN Co network.

Fletcher said that the NBN had withstood a huge spike in usage as workers and students operated from home with the NBN Co increasing capacity as the demand rose.

Ross who has made headlines over the years for his vocal opposition to the Liberal broadband network plan and his support for Labor’s alternative model has been left with “egg on his face” claims one observer who Ross critisised during one of his tirades.

The former technology editor at the ABC’s once claimed he was gagged from writing about the National Broadband Network because management “didn’t want to upset” Malcolm Turnbull.

When he could not get his own way at the ABC left his job of five years.

Communications Minister Paul Fletcher

In posting the news on his Twitter account, he set off a storm when he alluded that he had not been allowed to write about the NBN.

The AFR claims that Fletchers latest comments will prick the ears of Telstra CEO Andy Penn, who has long harboured plans to try and buy back the wholesale revenues lost to the NBN.

Mr Fletcher said the ability of NBN to raise significantly more debt than the $2 billion it had initially intended, had proved doubters of the multi-technology-mix (MTM) network’s financial viability wrong.

He said it gave extra flexibility to NBN’s management when repaying its debts to the Commonwealth and in planning possible technology upgrades.

This could mean NBN leadership moving areas off fibre-to-the-node (FTTN) to fibre-to-the-curb or premise (FTTP) where it identified a commercial demand.

Fletcher said of the NBN today “They’ve now got additional financial resources through the debt, and we’ve said, amongst things they could do with that, is to pursue positive return on investment opportunity.

“We’ve been very serious about NBN having a professional, capable board and management. It’s their job to understand, identify the market, customer behaviour, what the technical possibilities are, and crystallise that into particular proposals. What those might be is for them to develop.

Most people don’t know what particular technology is being used to deliver their connection.

The Ministers comments re InfraCo have surprised many as Fletcher has previously downplayed the possibility of Telstra acquiring the NBN, due to legislation forbidding the owner of the wholesale network from also being a retailer.

Despite Telstra creating a separate division called InfraCo, which many view as a potential home for a privatised NBN, Mr Fletcher has previously said he was “unable to see any scenario,” where it could be allowed to become the owner of the wholesale network.

However, despite reiterating the laws around wholesale and retail ownership, Mr Fletcher now suggested it could be possible, when asked about InfraCo being spun off by Telstra as a separately listed company.

“It continues to be our policy, as it was Labor’s policy, that in due course NBN will transfer to the private sector. There’s a series of steps set out in the Act that would have to occur. We’re not even at the first step yet. So, it’s going to be sometime before privatisation is happening, but that certainly is the ultimate direction,” Mr Fletcher said.

“I’ll leave it to Telstra’s bankers and lawyers to dream up structures. But the position is clear, if you operate retail telecommunication services, there’s a barrier that applies to your acquiring NBN. If you don’t, then that particular barrier does not apply.

NBN -COVID-19 Era

More than seven million Australian consumers are now connected to the NBN after the activation of 455,000 new services in the three months to March 31.

The connections were made as available NBN bandwidth per user jumped by 31 per cent during the March quarter, following NBN Co’s boost of the network capacity in response to the COVID-19 pandemic.

The ACCC’s latest quarterly Wholesale Market Indicators Report, released today, shows total Connectivity Virtual Circuit (CVC) per user increased from 1.92Mbps to 2.52Mbps during the March quarter, after NBN Co temporarily provided retail service providers (RSPs) with up to 40 per cent extra capacity at no additional cost.

“We were pleased to see NBN Co and RSPs work together to ensure Australians can stay connected during these unprecedented times,” ACCC Chair Rod Sims said.

“Consumers have been downloading and uploading record amounts of data for online work, school and social activities, which has been essential in helping households get through this challenging situation.”

The report shows smaller RSPs increased their collective share of the NBN wholesale market from 7.5 per cent to 8.1 per during the quarter. Leading this group, Aussie Broadband and Vodafone acquired 3 per cent and 1.9 per cent of wholesale services respectively.

“It is good to see the trend of smaller RSPs increasing their share in the market continue. More competition means more choice and better services for consumers,” Mr Sims added.

Telstra continued to be NBN Co’s biggest wholesale customer, accounting for 47.6 per cent of all services acquired, followed by TPG with 22 per cent, Optus with 15.3 per cent and Vocus with 7.1 per cent.

The number of higher speed plans (50Mbps and above) taken up by Australian households continued to increase, to comprise 65.4 per cent of all NBN services. Almost 57 per cent of residential NBN were 50Mbps plans at March 31, while 100Mbps plans accounted for 8.6 per cent of all services.

However, more than 2.2 million households remained on 12Mbps and 25Mbps plans. The number of entry-level 12Mbps services remained at about 1.16 million, representing 16.4 per cent of all residential services on the NBN, slightly lower than 17.6 per cent at the end of December 2019.

There remained at least 10 wholesale access seeker groups directly connecting to the NBN at each of the 121 NBN points of interconnect.

 

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