What Telstra's $11 Billion NBN Deal Means For Consumers

Coverage of Telstra's $11 billion deal to migrate its customers to the National Broadband Network has been rampant in the last few days, but much of that has focused on the business and political implications for the company. What will it actually mean for the mug punter?

Picture by andrew_ashton

In the spirit of our earlier discussions of why the government wanted Telstra to split, why backhaul is important to the NBN and why the NBN itself matters, here's the key things to understand about the deal. If you're not up to speed on NBN matters generally, those guides might be a good place to start.

The government has long wanted Telstra to be an active participant in the NBN process, and one reason is because Telstra already controls access to a huge network of cabling ducts, pits, pipes and other underground infrastructure. Even if the NBN eventually replaces all the current copper networking, it would be much cheaper to utilise the existing spaces it sits in than to have to go through a complex process of getting permits to dig and then going through that construction work. Telstra, unsurprisingly, doesn't want to offer access to those resources for nothing.

Last September, the government announced plans to force Telstra to structurally separate, making its wholesale and retail business entirely distinct. While that decision itself had big potential benefits for consumers, since it would stop widely-documented abuse of network ownership by Telstra, it was also widely interpreted as a means of trying to persuade Telstra to take part in the NBN.

That's effectively what has happened with the "heads of agreement" between Telstra and NBN Co (the company which is building the network) announced on Sunday. Under that deal, Telstra will move all its voice and data customers from its own copper network to the NBN as that network is built out. (While it won't move its current Foxtel customers off the existing cable network, the NBN should be equally capable of handling video traffic, and will have a much wider reach than the cable service.) It will also allow access to its existing network. In return, it will receive a series of payments over several years which Telstra has valued at $11 billion. It will also effectively shift the current "universal service obligation" requirements that currently guarantee a basic phone service to all Australians from Telstra to the NBN.

The NBN has always been a long-term proposition, and much of the detail hasn't yet been worked out. The agreement is "non-binding", so if major technical snags appear, the whole deal could collapse and consumers could be as badly off as ever. However, if that happens, the sanctions proposed in last September's Telstra split plan also kick in, which Telstra certainly doesn't want, since it would restrict its ability to bid for mobile spectrum used for voice and data services.

The Telstra deal comes just as we've seen the first actual NBN plans announced, though they only apply to a small area of Tasmania. The deals offered by iiNet, Internode and are very different, which certainly suggests that the NBN should be capable of producing competitive pricing. It will be fascinating to see how Telstra, which has never enjoyed any kind of reputation for decently-priced broadband services, chooses to price its own services on the network.

While the range of choice will be good for consumers, a staged migration is bound to cause some confusion, and there'll inevitably be horror stories of customers told to move off one network only to find the other isn't available. In the big picture, however, the deal seems like good news. The biggest question mark? The Liberals have already said they would cancel the entire NBN project if elected, a decision which if nothing else suggests that neither major party can be rated as technology-friendly when the inevitable election comes around.

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Comments

    Or to put it another way, the government just offered to pay Telstra $11billion for a hole in the ground - well, several million miles of hole but ultimately, hole.

      Which they will fund by taxing the holes, the miners have dug.

      biggest win to T$ is :It will also effectively shift the current “universal service obligation” requirements that currently guarantee a basic phone service to all Australians from Telstra to the NBN."

      wouldn't it make more sense 2 have charged T$ for rent 2 have the trenches in public ground or on state owned poles if it did not allow access 2 them.

    Here's what is going to happen. By the time NBN project is close to competition, wireless will be more popular and not many people will have wired internet just like not many people have dialup internet today.
    Telstra's bid is going to be the highest for wireless internet spectrum (thanks to government's 11 billion cheque). Which means telstra will own air space for internet and other providers will pay royalties to telstra.
    Then some other communications minister will come up with WBN (wireless broadband network) and history repeats itself...

      sooner or later every thing ends up going though a wire even 3g data is parsed though a cable of some sort sooner or later.

      Sorry, but that is complete and utter bollocks.

      Even with the introduction of LTE and beyond, we will most likely see comparative gains in wired speed. The NBN will be used to deliver a lot more than just our porn and torrents, assuming the government of the day doesn't abuse their authority over the nations infrastucture (I know, big if).

      Also, NBN seems to be taking over Telstra's USO, meaning that every home in Australia MUST be given access to it, at very least for a home phone. This already gives them more possible connections than any wireless carrier. NextG does have fantastic coverage and speeds, but there are blackspots. lots of them.

      Personally, I feel this is exactly the kind of project government should take on. The nation's infrastructure is the government's responsibility. That's simple enough you Friedmonites, right? It's not something that is in the interest of the "free market", because some parts of the country don't provide much return on investment.

      Aside from their horrendous record regarding online privacy (and the general Ass-hat that is Stephen Conroy), I've got to give props to Rudd and his team regarding this issue. There's no chance in hell that a Liberal government would play this kind of hardball with a company this big in the larger national interest.

    So, the people of Australia are buying back that which they once owned before it was sold to the Australian public ;)
    Oh well, maybe we can sell it again later!

    A hole that WE owned, before they flogged it ! Beyond stupid.

      How is it _really_ any more ridiculous than buying a plot of land in a city CBD, and selling it again later for 4x the price? At least these 'holes' are doing SOMETHING.

    Ahh. So they're going to speed us up with this NBN thing, then that douche Conroy is going to slow us down. I hope it evens out.

      It should even out. Unless you don't have antivirus software. Then you won't get internet at all.

      Nope, we have incompetent, technology unfriendly politicians on both ends: therefore, the NBN won't deliver, and the filtering scheme will slow our internet back about 3 stages. Therefore, you're on ADSL2? Nope, you get dialup speeds...

    Why is it that Telstra Mobile Network can take 7 days to alert me that I have a message? I have numerous Black spots in Townsville where I live despite having a Blue Tick phone" which gives me coverage over the State" Telstra is no better than Vodaphone in coning the general public, they may be even worse than Vodaphone. I have a home email service which does not work, a mobile service which gives me messages 5/7 days after they have been left by a customer/friend , and this from the leading Telco, wow aren't we the lucky country? 2nd rate crap which we get to pay top dollar for, who is the dumb one in this equation? not Telstra that's for sure, it's us!!!!
    Why do we pay for service that are not provided? why do we believe that it is just us that is having problems?. If someone can out a class action against Vodaphone, we should gang up against Telstra, until we get value for money.

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