Telstra’s copper and NBN’s fibre: will the two ends meet?
Last year I wrote about how deregulation of the telecommunications sector over the past two decades did not prevent conflict arising between the incumbent Telstra and the NBN, or “New Telstra”. This week’s deal between the infrastructure behemoths to merge their networks is a step in the right direction, if the two ends meet. Under the $11 billion agreement, NBN Co will access Telstra’s “fit-for-use” infrastructure and Telstra will migrate its customers from copper and HFC networks to NBN fibre.
In return, NBN (government owned) will compensate Telstra (used to be government owned) for the migration of traffic on to the NBN and the decommissioning of its network.
As I said, perhaps it would have been easier – and less bureaucratic – to turn Telstra into the NBN in the first place. Doing this way will benefit Telstra shareholders, in the short term at least.
Now we need to see if the two parties can agree on the technicalities of the migration. At one end we have Telstra’s legacy, but necessary, copper infrastructure and at the other end we have NBN’s visionary, but nascent, fibre cables.
Spending $43 billion to recreate Telstra was always only going to go part the way to solving the open access problem as there remains a high-level of existing infrastructure (business and residential) that needs to co-exist with any new network.
Spending $43 billion on an open access NBN, what could possibly go wrong? At that level of investment the question becomes one of survival as much as it is one of prosperity. I won’t go on about the relative success and failure of the Rudd government’s previous infrastructure projects.
No government has experience delivering a project of this scale so just making it a success – if “goals achieved on time and on budget” is the rule for success measurement – will be a real eye-opener in itself.
Where to now for a more successful NBN? There a no silver bullets, but here are some points to consider.
- Leverage, leverage, leverage! As I wrote in the previous blog: “the existing national infrastructure just becomes the NBN”. The Telstra deal makes this a real possibility. By leveraging as much existing infrastructure as possible a lot of risk is taken out of the project. By its own admission “Reduces infrastructure duplication and creates more efficient and certain roll out of broadband network
- Be as agile as possible. The government may pride itself in spending a truck load of money for “nation building” purposes, but that, as people in the software industry will testify, doesn’t mean a successful project. NBN Co needs to identify “quick wins” and monitor the budget accordingly.
- Don’t forget about the other carriers. It goes without saying, what level of telecommunications competition Australia does have should be enhanced with this deal and not eroded by it. Other infrastructure providers may well follow suit even if they have thus far expressed disdain at the whole idea. As NBN Co chief executive Mike Quigley said: “While there is a considerable amount of negotiation and contractual work to go, we believe this agreement is a significant step forward to creating a more competitive telecommunications industry.”
- Keep the kill switch handy. If things go pear-shaped with some implementations, don’t repeat the same mistakes in others. A project manager once told me “no project at all is better than a failed project”.
It’s very unlikely for a project of this scale not to encounter some problems, but if the Telstra and NBN ends meet we can have some confidence the whole exercise won’t be a subterranean white elephant.