Australia to pay Telstra A$11 billion for entire copper network
By Sean Hollister 
posted June 20th 2010 3:42PM
posted June 20th 2010 3:42PM
Telstra signs Financial Heads of Agreement on NBN
Media Release 20 June 2010
Telstra today signed a non-binding Financial Heads of Agreement with NBN Co to participate in the rollout of the National Broadband Network (NBN).
The transaction, if completed, would deliver to Telstra a post-tax net present value of approximately $11 billion. This includes payment for the decommissioning of Telstra's copper network and cable broadband service, use of Telstra's infrastructure, and the value to Telstra of avoiding costs, including certain Universal Service Obligation (USO) costs. Payments would be made progressively to Telstra.
The transaction would see Telstra progressively migrate its voice and broadband traffic from its copper and cable networks to NBN Co's network as it is rolled out. Telstra will continue to use its cable network to meet its pay TV contract with FOXTEL.
Telstra Chairman Catherine Livingstone said the milestone was encouraging after a year of complex negotiations.
"The Heads of Agreement is consistent with the Government's high-speed broadband vision and desired industry structure. This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry," Ms Livingstone said.
Telstra Chief Executive Officer David Thodey said: "We will continue to work with the Government and NBN Co on the detail required to implement the principles agreed today. While today's agreement is an important step, a very significant amount of work must still be done on many complex issues."
These issues are as diverse as migration processes, taxation, the future of legacy regulations applying to Telstra and the consequences of any major changes to the NBN rollout schedule.
While the Government is not a party to the Heads of Agreement, Telstra has received written confirmation from the Prime Minister that Telstra would be able to bid for Long Term Evolution (LTE) wireless spectrum should the transaction be completed and that sufficient regulatory certainty will be provided on a range of matters for NBN Co and Telstra to enable the transaction to proceed.
In addition to requiring shareholder approval, the Heads of Agreement has a range of conditions, including the passage of necessary enabling legislation and ACCC approval. Accordingly, there can be no guarantee at this time that the transaction will progress to completion.
The Heads of Agreement provides the framework for definitive agreements to be negotiated over the coming months. Should those agreements be finalised Telstra expects they would be put to shareholders in the first half of calendar 2011. Shareholders and investors would receive comprehensive detail in relation to the definitive agreements and an independent expert's report on the transaction well before the shareholder vote.
@Coptician
The value isn't in the copper, its in the ducts and pipes which the copper runs. They don't wont to have to re-dig and install this all again.
@Coptician they're buying out the copper and hfc to use the ducts, pits, conduits and the space instead of running it overhead or digging, saving time.
@Coptician
You have no idea what you're talking about.
Idiot.
Watch OUT! That giant underwater killer cable is right behind you!!!
@XciteMe
Thats actually what killed steve irwin, not a stingray
This is nothing to celebrate if you live in Oz. Now the moralist pantywaist government will censor the entire internet experience for Australians.
Though I'm sure the liberal crazies here will proclaim the move as a model we should follow here in the US.
@LANjackal : yeah, we gotta censor the 'net immediately. No, no, not pedophile porn or anything..you know, the real bad stuff - tea party forums!
@LANjackal
These "liberal crazies" aren't the ones doing the censoring these days. So no need to worry about them. How about the "conservative-republican crazies" who have been doing the censoring, like...I don't know..trying to rewrite history by editing history textbooks...
@Ryan Hemler Seeing as how time travel is impossible, there aren't that many options if you want to "edit" history. Sorry ;)
@Ryan Hemler : LOL you fail, utterly. First off, the entire "revisionist history" movement was the brainchild of liberals in the early 80's and continues to this day, although in recent years there has been some serious backlash against it (at last!). That's some well-documented history right there that the left has done its best to conceal. And yeah, I'm purty scared of those "republican-conservative crazies" with their calls for accountability in government and our leaders obeying the laws they write, oooo scary, LOL
@Ryan Hemler Nanny-state liberals have been bankrupting California for the last few decades with their overbearing regulations.
@psycros
It's funny. Both how you're bringing politics to a gadget blog and how you think the two parties are different.
When both are controlled by corporations, everyone loses no matter who we elect.
Rofl @ liberals censoring people. Take a look at Digg. Conservatives post and comment on there a ton. They aren't censored for their beliefs. Then take a look at the Drudge report or Glenn Beck's blogs. See who is censoring whom.
@psycros accountability... yeah, right. *cough*georgebush*cough. The problem with some of you guys (americans) is that both main parties are corrupt and your congress is run by lobbyists who have the rest of the country fooled into blaming the other party.
I love the US and its people, but id have to look to some really shitty countries to find worse politicians and policy makers than you guys. Well, not really, Spain, Greece, Portugal and Ireland will do. Sometimes it seems the world is being run by idiots.
That's huge sum of cash.
Looks like it is far from a sure thing:
http://www.abc.net.au/news/stories/2010/06/21/2932024.htm
@RonC : Brilliant. If somebody doesn't run that headline I'll be disappointed.
So, what's the point in high-speed fibre if the Australian Govt. are just going to filter anything which may benefit from the higher speeds?
I am glad to see Au to have somuch extra public funds laying around. There's no better use of public money, maybe next they can buy the tv networks :).
I am glad Au has so much spare cash
@Xing Sarcasm duly noted :(
Copper? Really?
While i support the idea of a national broadband service.. I certainly don't support copper. Fibre is the present and the future. Investing in copper is just not very reasonable. You can't get that much through copper while you can get nearly anything through fibre. Read any book on Computer Networks and you'll see how complicated some aspects/problems of copper are.
Please revise that.
@bergwitz - I'm fairly certain the article says that it's buying the copper network to decommission it to provide space for the fibre optic networks. They aren't just buying the infrastructure to use it as it is now for a source of income.
I live in Australia and its about time they did something
I had to get satellite because our phone line is shared with next-door. Satellite has really crappy plans we get 512k a second while you guys in America get a 10mb connection and can stream HD tv shows and Movies .Australia has the worst internet and now they’re finally doing something about it.
@Benny33 : pretty sure you could have the same if you lived in a municipality that offers cable or DSL. There's precious few left in the civilized world that don't. I live in the US, with an interstate highway in my back yard, and I have to use a cell phone for internet. The nearlest land-based broadband is ten miles in any direction. Satellite here is absolute garbage, not even worth considering. Not only that, but If I wasn't somewhat clever my cell provider would be charging me out the yang for tethering (with a microscopic bandwidth cap on top of that!). You're hardly alone, brother. I'd be overjoyed with a 256k low-latency connection, with no bandwidth limits, that I could afford (say, $50 a month..about the price of a typical 450 min + 200 texts a month cell plan here).
100 mbs isn't shabby for government sponsored interwebz
All your internets are belong to us. Big Brother is watching you.
It doesn't surprise me a government made a huge investment in copper lines instead of fiber. If you'd left the polio vaccine program in the hands of the feds we'd just have the best iron lung in the world, not an actual polio vaccine.
@jjl207 It's not an investment in copper lines, it's an investment in everything else, which means the government will just need to replace the copper, rather than build its own tunnels and connections to homes. Now unnecessary duplication, THAT's a waste.
So please stop treating every other government in the world by the same very low bar everyone uses for the US government.
Censorship incoming!!
They have to buy the copper to break the monopoly.
For years we have had situations like Telstra wholesaling bandwidth to lower tier ISP's then releasing retail plans below this cost.
They have dictated what ISP's can charge in this fake competitive marketplace, leading to Australia having some of the most ridiculous broadband plans on earth.
Slow speeds and capped plans are the norm here.
I don't think people actually get how the internet works in Australia.
Telstra used to be a government-owned monopoly. When they were sold off, they maintained the monopoly on the copper network and wholesaled the connections to ISP's. The prevailing argument was that this wouldn't be an issue which anyone with any sort of sense knew was stupid, and that was borne out when Telstra effectively priced smaller ISPs out of the market by charging more for wholesale than they did customers. What is happening now is what should have happened back then - the government wholesales the infrastructure (just like roads or whatever else) and private industry benefits from not having one private enterprise being the gatekeeper.
Besides, they're buying the copper to decommission it, because they want to use the holes in the ground for fibre. As an infrastructure project, the private sector could probably do it cheaper, but we'd likely be in exactly the same boat again with ownership.
The relief valve for broadband pricing here at the moment is the higher-tier ISP's installing their own infrastructure at exchanges (and in some cases even cabling to the home, which Optus did with cable back about 15 years ago) but even then Telstra still owned the majority of the physical lines and actual exchange rack space. In Metro you can get ADSL 2+ at near full speed (I pull around 17Mb) but a decent plan is not cheap and it's capped (I get 120GB/month). 3G has brought some new players into the game that don't require any Telstra backhaul (Virgin for one) but the prices and data limits are fairly hilarious.
Anything that gets the future of our broadband infrastructure out of the hands of a company that's proven itself time and time again not willing to play ball in a proper competitive marketplace is a good thing.
@reticulate
True that.
Now all we need to do is convince the government we don't want (or need, as their putting it) a national firewall.
Telstra should of gotten their act together in the first place.! I'm on extreme an get speeds of just over 18mbps
Ad not even half a mbit upload.!
Bloody oath. Bout time it happened. Sick and tired of Telstra messing with the market.
Hmmm, Now how do you people feel about the FCC taking over the internet?
What is that, half a billion $American?
@BigD145
closer to 10 and a half, the aussie dollar almost reached parity (1:1) with the USD not too long ago
That's just fantastic, the infrastructure will now be owned by an infinitely more incompetent group of persons. Ironically after that comment I still am kind of happy that Telstra doesn't own it any-more.
Telstra: "We have this massive copper network that is obsolete, and will be expensive to replace. We need to invest in high-speed wireless network technology to stay in the game. But where will we get the capital?"
Aus Gov't: "Hey, why don't we pay you $11 billion for your obsolete network. You can then use that money to buy all that LTE spectrum you need to become a monopoly in the wireless Internet business. People will go to you for service, because LTE will offer speeds higher than our 100Mbps, and they will trust you more because you're not us."
Telstra: "Wait, you're serious? WOOOOOOOOOOHHHHHOOOOOOO!!!"
It's great living in this country because it is so large and has many natural sights. However trying to lay a fibre network across a large area costs so much money!
YAY!
they will finally be able to provide top notch to their citizens:
FIOS
100Mb/s
fully firewalled
mostly censored
what's the use of broadband or fast internet if you cannot get porn
@D1Only1
here here
Hey some of you guys need to get your facts straight before you diss australia, old k rudd and his party will most likely be removed from government next election due to all the mistakes hes made, and with him goes his prized stephen conroy, meaning no censorship.
@Jordo1234
I wouldnt say Krudd has made any mistakes...hes just done nothing to help the country prosper. Hes been a feel good PM..Kyoto...apologising to the Aboriginals etc.
Omg, the official NBN website doesn't even work in FireFox, what a disgrace.
http://pc.mmgn.com/News/National-Broadband-Network-Epi
I've heard nothing but horror stories about Telstra's service (abandoning rural areas, dropped coverage etc) and made it through my whole life without experiencing it first hand until... last year.
I moved to a new state (Gold Coast Queensland) and I picked up a TPG ADSL plan ($79 a month) as an interrim. When TPG rolled out their ADSL 2+ plans, I decided to pony up and found to my horror that my place, or any other on the street, couldn't upgrade because of something called a "Pair Gain" system where the people who installed the landlines split the wires to support 2-4 houses each. It was popular in the mid 20th century as it was cheap to install. This housing block is bit over 10 years old, yet they skimped on a bunch of wiring, hence 0 future-proofing, as Pair Gains cannot support 2+ or any significant ADSL1 bandwidth either.
Since Telstra installed it and owns the infrastructure, no other ISP is physically able to do anything about the problem. So after a lifetime of consciously avoiding their service, they reached out from beyond the grave to twist my arm.
Telstra's the absolute worst example of a network provider (apparently AT&T's terrible too, but I haven't experienced it). Any less control Telstra has will always be a huge boon. The tinfoil hat parade may claim the government's worse, but ANYTHING will be better than how Telstra's run things. It's disgusting such a dominant service provider can run with such little ethics, competance or accountability.
We salute you, our half-inflated government overlords!
@Strand0410 Pair Gain is a bitch. I moved into an apartment about a year ago in Brisbane and was dreading hearing those words. Luckily the guys that built this place didn't cheap out on the connections.
FttH will fix this, thank god. It's more just a matter of waiting now.