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Bombshells in NBN documents
EXCLUSIVE: Annabel Hepworth and Mitchell Bingemann From:The Australian
November 04, 201012:00AM
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THE Gillard government must urgently pass legislation to smash apart
Telstra's near-monopoly position for the implementation of the $43bn
NBN to proceed.

This has been revealed by previously secret documents.

A brief to the incoming government, obtained by The Australian under
Freedom of Information laws, also makes the explosive revelation that
NBN Co abandoned its support for key recommendations from the $25
million implementation study on the NBN.

Despite NBN Co being "heavily involved" in the McKinsey-KPMG study,
the briefing says that "significant differences" emerged over the
recommendations relating to the design of the high-speed broadband
network and the nature of the prices and products that NBN Co will
offer to customers.

The revelation could shed light on the government's failure to release
its response to 84 recommendations in the implementation study,
despite Treasury making an "early priority" of responding to the study.


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The office of Communications Minister Stephen Conroy has been saying
for months that the government would release the response "shortly".

The documents also highlight the massive funding task to roll out the
network, confirming that the government would provide $26bn in equity
funding. This is likely to be largely done through commonwealth-issued
debt, leading to interest costs that would have a "negative impact on
the budget bottom line", the briefing states.

Slabs of the documents released by Senator Conroy's department were
blacked out. The documents would have gone to the minister soon after
the election but there was no date on those released.

The briefing paper stresses the urgency of acting swiftly on the NBN.
The government has been told that the laws to structurally separate
Telstra must be passed during the spring sitting of parliament, due to
finish on November 25.

Telstra has agreed to structural separation -- splitting its wholesale
from its retail arm -- as part of its $11bn non-binding deal with the
NBN Co.

The laws were re-introduced to parliament on October 20. Although
there is now broad support for elements of the bill that deal with
structural separation, a dearth of detail on the costings of the
network have hindered the government's aims in getting the support to
push the bill over the line.

Senator Conroy has been frustrated by what he claims is an attempt by
the opposition to delay the bill. He has previously warned that its
failure to pass could result in cost and timeline blow-outs for the NBN.

The bulk of the telecommunications industry has said that building an
NBN without first overhauling the regulatory system could jeopardise
the project.

According to the briefing: "The passage of this legislation will drive
the timing of Telstra and NBN Co being able to finalise a deal."

Telstra chief executive David Thodey told investors at the company's
annual strategy day in late September that passage of the law was
fundamental to getting the deal approved by the board and shareholders.

He said the law needed to be passed between October and next March so
that shareholders could vote on the deal before its deadline of next
June.

Legislation requiring new property projects to be "fibre-ready" also
needs to be passed "as early as possible" during the upcoming
parliamentary sitting, the brief says. These new arrangements are
supposed to take effect on January 1 and property developers have
warned that their work on new construction has been plagued by
uncertainty.

According to the documents, issues needing to be resolved include when
NBN Co can start seeking contributions from developers in
"particularly high-cost situations".

Other legislation setting up core aspects of NBN Co's role --
including relating to its ownership and governance -- should be passed
this session.

Another area where the briefing calls for urgency is in the release of
a long-term digital economy strategy, noting that the government
pledged a raft of e-health initiatives during the election campaign.

It warns that the government risks being criticised unless it has
funded initiatives and says that "most serious funding activity can
only be dealt with by user portfolios: health, education, etc".

On the matter of NBN Co having departed from the findings of the
implementation study, the briefing specifies the contentious question
of the number of interconnection points through which retail service
providers can access the broadband network.

There have been recent tense talks between the NBN Co, Telstra and the
Australian Competition & Consumer Commission over the matter, which
led to an ACCC discussion paper late last month.

The documents suggest a tension between boosting competition and
making the roll-out cost effective. Many telcos are threatening to
seek compensation if the plan leaves their assets "stranded".

Additional reporting: Sid Mah