Is Telstra Close To Giving Conroy Two Finger Salute?

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Senior Telstra executives have admitted to SmartHouse that the Company has a “costed plan” based on the carrier building their own fibre network in Australia in competition to the proposed NBN network.

We have also been told that Telstra research and development staff is currently exploring the concept of delivering a high speed wireless network without the need to negotiate with the Federal Government for 4G mobile spectrum in the future.

Yesterday Telstra said that it was “very concerned” about draft legislation that may allow the government’s NBN fibre broadband Company to offer retail services to consumers in direct competition to Telstra.

Telstra is also said to be formulating an alternative strategy that has been discussed with the Tony Abbott led, Federal opposition, who if they won power at the next general election could make significant changes to the NBN Co strategy to include a closer working relationship with commercial investors, Telstra and other operators in the market.

According to Coalition sources the opposition is set to mount a campaign, highlighting the high cost of delivering the proposed NBN network, who yesterday got $100million dollars from the Federal Government to trial five locations in Australia as part of the testing process for the proposed fibre optic network .


The Opposition is also set to highlight the fact that new high speed networking technology, similar to what Google is set to trial in the USA, is emerging that could threaten the targeted speeds that the NBN is proposing. “By the time the NBN deliver their network in five to seven years time the technology they are using will have moved on and Australia could be left with a multi billion dollar white elephant” said a Telstra executive.

 

 Under the current drafting of the proposed legislation that is set to go before the lower house on 9 March, Communications Minister Senator Stephen Conroy is advocating that the NBN Co be given the power to move into the Australian retail market, selling retail products up against mass retailers, as well as carriers like Optus, Telstra and Vodafone.

Testra CEO David Thodey, has constantly reiterated that Telstra will only “act in the best interest of shareholders and customers” with the latest draft ruling creating concern for both the Telstra board and the Telstra management team, who are now convinced that a relationship with the NBN will not work, if theNBN organisation is allowed to control costs at a network level and then compete with Telstra at a wholesale retail level.

The former MD of Telstra’s retail operation, David Moffatt, last week told SmartHouse that no one has to worry until the final draft of the proposed legislation is seen on 9 March.

Moffatt claims that while the NBN Co has some smart people working for it, but retail will be “difficult and expensive”.

“No one really has to really worry until we see the colour of the final bill. However, if there are some self-evident points of concern, the carriers will respond. If the Government says to all of the wholesale traffic providers, we are going to build something and you are going to have to come to us, and they want to advantage themselves by selling a product at a retail level, this is going to cost them a lot more money than what is currently being proposed,” said Moffatt.

He added, “The retail concept is then going to have to go before the NBN shareholders and be signed off by the Federal Government. If this becomes reality, the wholesale carriers are then going to have the option of taking their business elsewhere or they could strategically choose not to play ball with the NBN. It is still early days and there is still a long way to go. If they do go into retail, it will be extremely tough for them to compete,” he added.

We also revealed that speculation is also mounting that former Telstra Group Managing Director Holly Kramer is currently talking to NBN executives about a retail role. A former Ford executive, Kramer quit Telstra suddenly late in 2009 after a trip to HTC in Taiwan. She was recently seen visiting the NBN Co offices.

According to Bloomberg Communications Minister Stephen Conroy released bills last week that affirmed the “wholesale-only” plan, while giving him discretion to allow NBN to sell services directly to some users such as government agencies. Telstra’s enterprise and government division had sales of A$2.2 billion in the six months ended Dec. 31, about 18 percent of its total, the company said last month.

“It raises for the first time the prospect of NBN Co. becoming a government-funded retailer,” Telstra said in the statement. “We are very concerned about this potential change in the government’s position. If enacted, we would need to factor this into the financial consideration required to achieve an agreement.”

Telstra, which is facing calls from Conroy to split from its fixed-line assets, said talks with the government are continuing.

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