PM falls short of cheaper broadband guarantee

Following the $11 billion agreement between NBN Co and Telstra, Prime Minister Julia Gillard could only cite the obvious fact that with more competition broadband prices were likely to drop

Prime Minister Julia Gillard has fallen short of guaranteeing cheaper broadband for Australians following the signing of the $11 billion agreement between Telstra (ASX:TLS) and NBN Co.

Commenting on the [artnid: 391185|the agreement|new]], which follows two years of protracted negotiations between the telco, the Federal Government and NBN Co, the PM welcomed the deal but could not guarantee broadband costs would decrease.

“As a result of the structural separation of Telstra, we will have full competition," she said "Competition means more choice and cheaper prices wherever you look in our economy, wherever you look around the world competitive markets are markets that give consumers more options, more choice and cheaper prices, that’s what will happen with super fast broadband.

“We’ve already been very clear about the wholesale costs, we’ve been very clear about getting this uniform for regional Australia and for city Australia, what that means is we’re ending the absolutely long-term scourge in this country that regional Australia paid more for its telecommunications, those days are gone.”

“Vodafone as well as a number of other companies are now offering into Armidale services that they’ve never offered before and we all know when more services are offered there’s more competition and prices come down,” communications minister, Senator Stephen Conroy, said of the agreement.

Commenting on the agreement, shadow communications minister, Malcolm Turnbull, rebuffed the suggestion that broadband prices will drop as a result of the agreement.

“Telstra understandably negotiated the best deal for its shareholders," Turnbull said in a statement. "Senator Conroy negotiated the best deal for Labor’s political interests. But no one at the table sought the best deal for the millions of Australians whose taxes will bankroll the $50 billion NBN and pay Telstra to scrap its copper network.”

“The deal will also have damaging consequences for consumers – that is, every Australian that purchases broadband or telephony services during the next decade,” he said. “The NBN Co corporate plan makes it clear that broadband prices will be high and stay high.

According to Turnbull, competition to the NBN from other fixed line networks including the hybrid coaxial cable pay TV connections owned by both Telstra and Optus has been eliminated, following the $800 million agreement Optus signed with NBN Co to migrate its HFC customers to the NBN.

“Right now many Australians are using very fast broadband over the Telstra and Optus HFC cable network," he said. "That network could have provided real competition for the NBN and in doing so kept prices low, but in this extraordinary deal those HFC networks will not be allowed to compete with the NBN.”

While the NBN is optional for Australian residents, Conroy said, those residents who choose not to be connected to the NBN during the initial rollout only to change their mind down the track will be charged a fee.

“Obviously it’s a free service at the moment, if you change your mind that’s something NBN have been considering… I think the only cost that has been speculated on by NBN was around $300-$350,” Conroy said.

Echoing this sentiment, NBN Co chief executive, Mike Quigley, said as the network is rolled out people will be connecting deal for which there will be a period of time after which a region’s copper will be “closed down”.

“People have multiple opportunities during that period to connect and we will obviously as NBN Co will be going back, so people will always have the opportunity to come back and have a connection and all that will be provided by NBN Co."

“At some point in time we obviously have to draw a line and say from here on in, in this area if you haven’t decided to take it up now and you’ve had several opportunities then we may levy a charge,” Quigley said.

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Tags broadbandNational Broadband Network (NBN)

More about etworkFederal GovernmentOptusQuigleyTelstra CorporationVodafone

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