Telstra has control of the sale of copper assets

Following on the post about Infrastructure Australia recommending the split up and sale of the NBN, it appears that Telstra has control of the sale of the copper and HFC assets in the NBN network. When you are the prospective buyer of a incredibly large piece of infrastructure, it is always good to have the say on who the owner can sell it to.

Below is an excerpt from Telstra announcement on the re-negotiated definitive agreement:

The company has secured asset disposal restrictions should NBN Co sell the HFC or copper network after ownership is transferred. These restrictions would, in certain circumstances, require a buyer, such as another large retail service provider, to enter into a direct agreement with Telstra to buy the assets.
Asset Disposal
In order to give Telstra protection against a disposal by NBN Co of the copper or HFC assets that it acquires from Telstra, the parties have agreed restrictions on NBN Co’s ability to dispose of those assets, particularly to large RSPs. The restrictions vary depending on when NBN Co proposes to dispose of the assets, and in certain circumstances require a proposed acquirer to enter into a direct agreement with Telstra as part of the proposed acquisition of those assets. These provisions will give Telstra the ability to appropriately protect its interests at the time.
Once rollout cessation occurs, Telstra’s network preference and disconnection obligations shrink to the NBN fixed line footprint that exists at the time of the rollout cessation.

My personal interpretation and opinion, not necessarily that of the Committee is the effective result of the changes to the definitive agreement is that:

1. Copper and HFC have been made an essential part of the NBN Wholesale network;
2. Telstra controls the sale of that part of the network; and
3. Telstra could easily buy the NBN wholesale network as they control who the essential part of the network (or if it gets sold to someone else, then they can get leasing charges for use of it).

So in effect:

• Telstra has effectively got the taxpayer to upgrade their network – which they should have been doing for the past 15 years;
• The taxpayer is paying for the maintenance of that network (the big cost component of owning the network to Telstra); and
• Telstra will ultimately get back its wholesale monopoly.

It appears to me that the NBN has now been reconfigured to be sold off once the $29.5bn funding cap has been expensed, and I have no doubt any FTTP upgrades will cost alot more then that they do now once in the hands of the private sector.

Please feel free to discuss in comments below.

Cheers

Steve